[Senate Report 115-445]
[From the U.S. Government Publishing Office]


 						   Calendar No. 736

115th Congress}                                            { Report
                                 SENATE
  2d Session  }                                            { 115-445

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

                     PAYMENT INTEGRITY INFORMATION 
                              ACT OF 2018

                               __________

                              R E P O R T

                                 OF THE

                   COMMITTEE ON HOMELAND SECURITY AND

                          GOVERNMENTAL AFFAIRS

                          UNITED STATES SENATE

                              TO ACCOMPANY

                                S. 2948

               TO IMPROVE EFFORTS TO IDENTIFY AND REDUCE
        GOVERNMENTWIDE IMPROPER PAYMENTS, AND FOR OTHER PURPOSES

[GRAPHIC NOT AVAILABLE IN TIFF FORMAT]

               December 19, 2018.--Ordered to be printed
               
               
               
           U.S. GOVERNMENT PUBLISHING OFFICE                    
                    WASHINGTON : 2018       
               
               
              
               
               
        
        COMMITTEE ON HOMELAND SECURITY AND GOVERNMENTAL AFFAIRS

                    RON JOHNSON, Wisconsin, Chairman
ROB PORTMAN, Ohio                    CLAIRE McCASKILL, Missouri
RAND PAUL, Kentucky                  THOMAS R. CARPER, Delaware
JAMES LANKFORD, Oklahoma             HEIDI HEITKAMP, North Dakota
MICHAEL B. ENZI, Wyoming             GARY C. PETERS, Michigan
JOHN HOEVEN, North Dakota            MAGGIE HASSAN, New Hampshire
STEVE DAINES, Montana                KAMALA D. HARRIS, California
JON KYL, Arizona                     DOUG JONES, Alabama

                  Christopher R. Hixon, Staff Director
                Gabrielle D'Adamo Singer, Chief Counsel
                  Daniel J. Spino, Research Assistant
               Margaret E. Daum, Minority Staff Director
       Charles A. Moskowitz, Minority Senior Legislative Counsel
                     Laura W. Kilbride, Chief Clerk
                     
                     
                     
                     
                                                   Calendar No. 736

115th Congress}                                            { Report
                                 SENATE
  2d Session  }                                            { 115-445

======================================================================
 
               PAYMENT INTEGRITY INFORMATION ACT OF 2018

                                _______
                                

               December 19, 2018.--Ordered to be printed

                                _______
                                

 Mr. Johnson, from the Committee on Homeland Security and Governmental 
                    Affairs, submitted the following

                              R E P O R T

                         [To accompany S. 2948]

    The Committee on Homeland Security and Governmental 
Affairs, to which was referred the bill (S. 2948) to improve 
efforts to identify and reduce Governmentwide improper 
payments, and for other purposes, having considered the same, 
reports favorably thereon with amendments and recommends that 
the bill, as amended, do pass.

                                CONTENTS

                                                                   Page
  I. Purpose and Summary..............................................1
 II. Background and the Need for Legislation..........................2
III. Legislative History..............................................3
 IV. Section-by-Section Analysis......................................3
  V. Evaluation of Regulatory Impact..................................4
 VI. Congressional Budget Office Cost Estimates.......................5
VII. Changes in Existing Law Made by the Bill, as Reported............5

                         I. Purpose and Summary

    The purpose of S. 2948 is to improve efforts to identify 
and reduce Government-wide improper payments. S. 2948 moves 
previous improper payment laws to one place in statute and 
updates and improves them as necessary. Better uniformity and 
consistency in these laws will increase agency compliance.

              II. Background and the Need for Legislation

    Improper payments are ``any payment that should not have 
been made or that was made in an incorrect amount.''\1\ In 
fiscal year (FY) 2017, the Government Accountability Office 
(GAO) estimated that Federal improper payments totaled $141 
billion dollars.\2\
---------------------------------------------------------------------------
    \1\Pub. L. No. 111-204.
    \2\U.S. Gov't Accountability Office, GAO-18-377, Improper Payments: 
Actions and Guidance Could Help Address Issues and Inconsistencies in 
Estimation Processes 1 (2018), https://www.gao.gov/assets/700/
692207.pdf.
---------------------------------------------------------------------------
    Since 2002, Congress has passed piecemeal bills that, while 
incrementally improving statutory authorities, are not well 
coordinated. The foundation of improper payments legislation is 
the Improper Payments Information Act of 2002 (IPIA), which 
first required Federal agencies to identify, prevent, and 
report improper payments. IPIA requires Federal agencies to 
report on their actions to reduce improper payments on all 
programs or activities that exceed ten million dollars.\3\ IPIA 
also established definitions for ``payment'' and ``improper 
payment.''\4\ Later in 2002, Congress passed the Recovery Audit 
Act of 2002, which required agencies that enter into contracts 
exceeding five hundred million dollars to conduct proper 
oversight of contractor payments and employ recovery audits.\5\
---------------------------------------------------------------------------
    \3\Pub. L. No. 107-300.
    \4\Id.
    \5\Pub. L. No. 107-107 at Sec. 3561.
---------------------------------------------------------------------------
    As IPIA reporting requirements took effect, the number of 
agency programs that reported expanded, increasing the total 
amount of improper payments from $45 billion in FY2004 to $108 
billion in FY2012.\6\ In 2006, GAO recommended that Congress 
revise and expand IPIA to reduce improper payments.\7\
---------------------------------------------------------------------------
    \6\Garrett Hatch, Cong. Research Serv., R42878, Improper Payments 
and Recovery Audits: Legislation, Implementation, and Analysis (Oct. 
18, 2013).
    \7\U.S. Gov't Accountability Office, GAO-06-347, Improper Payments: 
Federal and State Coordination Needed to Report National Improper 
Payment Estimates on Federal Programs (2006), https://www.gao.gov/
assets/250/249728.pdf.
---------------------------------------------------------------------------
    In 2010, Congress responded to GAO's recommendation by 
passing the Improper Payments Elimination and Recovery Act of 
2010 (IPERA). IPERA defines in more detail the types of risk 
assessments agencies must complete. IPERA provides a detailed 
description of ``significant'' improper payments, which was 
previously up to agencies discretion. Although IPERA made 
positive changes to improper payment law, GAO identified 
additional challenges requiring legislation.\8\
---------------------------------------------------------------------------
    \8\U.S. Gov't Accountability Office, GAO-12-573T, Improper 
Payments: Remaining Challenges and Strategies for Government-wide 
Reduction Efforts 11 (2012), https://www.gao.gov/assets/590/589681.pdf.
---------------------------------------------------------------------------
    Two years later Congress passed the Improper Payments 
Elimination and Recovery Improvement Act of 2012 (IPERIA).\9\ 
In addition to refining definitions and reporting requirements, 
IPERIA requires the Office of Management and Budget (OMB) 
Director to identify a list of high-priority Federal programs 
for greater levels of oversight by the agencies.\10\ IPERIA 
also codifies the Do Not Pay Initiative.\11\ The Do Not Pay 
Initiative requires agencies to review a list of databases to 
verify the validity of a payment or award they are about to 
authorize.\12\ To carry out the Do Not Pay Initiative, the 
Treasury Department created the Do Not Pay Business Center to 
be a centralized analytics service center to help agencies 
comply with IPERIA.\13\
---------------------------------------------------------------------------
    \9\Pub. L. No. 112-248.
    \10\Id.
    \11\Id.
    \12\Id.
    \13\Bureau of the Fiscal Service, Do Not Pay Agency Implementation 
Guide For Treasury's Working System (2018), https://donotpay.treas.gov/
DNPAgencyImplementationGuidePublic.pdf.
---------------------------------------------------------------------------
    In 2015, the Committee approved and Congress passed the 
Fraud Reduction and Data Analytics Act of 2015 to require the 
OMB Director and the Comptroller General of the United States 
to establish guidelines for agencies to follow based on leading 
practices identified by GAO.\14\ The bill requires agencies to 
follow best practices established by GAO that focus on 
collecting and analyze data from reporting mechanisms, similar 
to the Do Not Pay Business Center, to better prevent improper 
payments before they happen.\15\
---------------------------------------------------------------------------
    \14\Pub. L. No. 114-186.
    \15\Id.
---------------------------------------------------------------------------
    While reviewing the history of improper payment 
legislation, the Committee found that IPIA, the Recovery Audit 
Act of 2002, IPERA, IPERIA, and the Fraud Reduction and Data 
Analytics Act of 2015 are not sufficiently coordinated. Under 
current law, statutory requirements concerning Federal improper 
payments are scattered throughout the U.S. Code, and some of 
these statutory requirements were not incorporated into U.S. 
Code as positive law.\16\ These statutes, when taken in sum, 
lack sufficient coherence, leaving certain aspects up to agency 
interpretation. To improve the coherence of improper payments 
laws and to improve agency compliance, S. 2948 repeals the 
previous improper payment laws and combines the language of 
each into a single new subchapter of U.S. Code. The bill omits 
areas of duplication, and improves and updates areas that 
warrant attention.
---------------------------------------------------------------------------
    \16\U.S.H.R., Office of the Law Revision Counsel U.S. Code, The 
Term ``Positive Law,'' available at http://uscode.house.gov/
codification/term_positive_law.htm.
---------------------------------------------------------------------------
    The Committee worked closely with the GAO and OMB on the 
legislation and received letters of support from the Project on 
Government Oversight, Americans for Tax Reform, FreedomWorks, 
National Taxpayers Union, Taxpayers for Common Sense, and the 
Taxpayers Protection Alliance.\17\
---------------------------------------------------------------------------
    \17\Letter from Americans for Tax Reform, FreedomWorks, National 
Taxpayers Union, Project on Government Oversight, Taxpayers for Common 
Sense, and the Taxpayers Protection Alliance to Senator Ron Johnson 
(July 3, 2018) (on file with the Committee).
---------------------------------------------------------------------------

                        III. Legislative History

    S. 2948 was introduced on May 24, 2018, by Senators Claire 
McCaskill (D-MO), Tom Carper (D-DE), and Ron Johnson (R-WI). 
The bill was referred to the Committee on Homeland Security and 
Governmental Affairs. The Committee considered S. 2948 at a 
business meeting on June 13, 2018. S. 2948 passed by voice vote 
en bloc with Senators Johnson, Portman, Lankford, Enzi, 
McCaskill, Carper, Peters, Hassan, Harris, and Jones present.

        IV. Section-by-Section Analysis of the Bill, as Reported


Section 1. Short title

    This section establishes the short title of the bill as the 
Payment Integrity Information Act of 2018.

Section 2. Improper payments

    This section moves several existing improper payments 
statutes to one place in the code. New Subchapter IV of Chapter 
33 of Title 31 now houses the IPIA, IPERA, IPERIA, and the 
Fraud Reduction and Data Analytics Act of 2015. This section 
also makes minor updates to these existing law as described 
below.
    Section 3352 is a rewrite of IPERA with new subsections and 
new definitions. A definition of the term ``scope'' is included 
to explain all the factors agencies should consider when 
gauging susceptibility to improper payments.
    Subsection (c) of 3352 integrates improper payment guidance 
from OMB Memorandum M-15-02. This guidance explains how 
insufficient documentation errors are to be classified as an 
improper payment. Incorporating this memorandum into section 
3352 strengthens the definition of the term improper payment.
    Subsection (c) of 3353 is a new addition that gives OMB the 
option to create one or more pilot programs to test potential 
accountability measures, incentives, and consequences for 
compliance and the elimination of improper payments.
    Section 3354 establishes the Do Not Pay Initiative, 
originally authorized in IPERIA. Subsection (e) adds to the Do 
Not Pay system a requirement that Social Security increase the 
frequency of access to the Death Master File to daily, and 
identify improved methods for determining improper payments due 
to death of the recipient.
    Section 3355 includes requirements of IPERIA, which was in 
31 U.S.C. Sec. 3301 note that requires the Director of OMB to 
determine the rate of improper payments and to set targets for 
recovering improper payments.
    Section 3356 provides the Director of OMB the authority to 
modify and update any guidance required by the legislation.
    Section 3357 is the new Fraud Reduction Data Analytics Act 
of 2015, with one change allowing OMB to update its guidance as 
needed.
    Section 3358 establishes a new working group that will 
enable Federal agencies to collaborate with each other and non-
Federal partners, such as state governments. The purpose of 
this addition is to aide in developing strategies to address 
root causes and driving factors of improper payments, such as 
fraud and eligibility determinations in state-managed federal 
benefits programs.

Section 3. Repeals

    This section repeals the existing improper payment statutes 
that are scattered throughout the U.S. Code, and within notes 
of U.S. Code, that section 2 reconstitutes within a new 
Subchapter of Title 31, and makes necessary conforming edits. 
Repealed statutes include IPIA, IPERA, IPERIA, and the Fraud 
Reduction and Data Analytics Act of 2015.

                   V. Evaluation of Regulatory Impact

    Pursuant to the requirements of paragraph 11(b) of rule 
XXVI of the Standing Rules of the Senate, the Committee has 
considered the regulatory impact of this bill and determined 
that the bill will have no regulatory impact within the meaning 
of the rules. The Committee agrees with the Congressional 
Budget Office's statement that the bill contains no 
intergovernmental or private-sector mandates as defined in the 
Unfunded Mandates Reform Act (UMRA) and would impose no costs 
on state, local, or tribal governments.

             VI. Congressional Budget Office Cost Estimates

    CBO failed to provide the Committee with a cost estimate in 
time for the final reporting deadline of the 115th Congress.

       VII. Changes in Existing Law Made by the Bill, as Reported

    In compliance with paragraph 12 of rule XXVI of the 
Standing Rules of the Senate, changes in existing law made by 
the bill, as reported, are shown as follows: (existing law 
proposed to be omitted is enclosed in brackets, new matter is 
printed in italic, and existing law in which no change is 
proposed is shown in roman):

UNITED STATES CODE

           *       *       *       *       *       *       *


TITLE 5--GOVERNMENT ORGANIZATION AND EMPLOYEES

           *       *       *       *       *       *       *


CHAPTER 57--TRAVEL, TRANSPORTATION, AND SUBSISTENCE

           *       *       *       *       *       *       *


    Subchapter I--Travel and Subsistence Expenses; Milage 
Allowances

           *       *       *       *       *       *       *


SECTION 5701 DEFINITIONS

           *       *       *       *       *       *       *



HISTORICAL AND REVISION NOTES

           *       *       *       *       *       *       *



CONSTRUCTION

           *       *       *       *       *       *       *


    (a) Executive Agency Accounting.--Nothing in this Act (see 
Short Title of 2012 Amendment note set out under section 101 of 
Title 41, Public Contracts), or the amendments made by this 
Act, shall be construed to excuse the head of an executive 
agency from the responsibilities set out in (section 3512 of 
title 31, United States Code, or in the Improper Payments 
Information Act of 2002 (Pub. L. 107-300) (31 U.S.C. 3321 
note)) section 3512 or subchapter IV of chapter 33 of title 31, 
United States Code.

           *       *       *       *       *       *       *


TITLE 6--DOMESTIC SECURITY

           *       *       *       *       *       *       *


CHAPTER 1--HOMELAND SECURITY ORGANIZATION

           *       *       *       *       *       *       *



Subchapter XV--Homeland Security Grants

           *       *       *       *       *       *       *



PART B--GRANTS ADMINISTRATION

           *       *       *       *       *       *       *



SEC. 612. ACCOUNTABILITY.

    (a) * * *
          (1) * * *
                  (A) * * *
                  (B) * * *
                  (C) * * *
                  [Consistent with the Improper Payments 
                Information Act of 2002 (31 U.S.C. 3321 note)] 
                Consistent with subchapter IV of chapter 33 or 
                title 31, United States Code, for each of the 
                grant programs under sections 604 and 605 of 
                this title and section 762 of this title, the 
                Administrator shall specify policies and 
                procedures for--
                          (i) identifying activities funded 
                        under any such grant program that are 
                        susceptible to significant improper 
                        payments; and
                          (ii) reporting any improper payments 
                        to the Department.

           *       *       *       *       *       *       *

          (5) * * *
          The Administrator shall conduct a recovery audit 
        under [section 2(h) of the Improper Payments 
        Elimination and Recovery Act of 2010 (31 U.S.C. 3321 
        note)] section 3352(i) of title 31, United States Code 
        for any grant administered by the Department with a 
        total value of not less than $1,000,000, if the 
        Administrator finds that--
                  (A) a financial audit has identified improper 
                payments that can be recouped; and
                  (B) it is cost effective to conduct a 
                recovery audit to recapture the targeted funds.

           *       *       *       *       *       *       *


TITLE 31--MONEY AND FINANCE

           *       *       *       *       *       *       *


Subtitle III--Financial Management

           *       *       *       *       *       *       *


CHAPTER 33--DEPOSITING, KEEPING, AND PAYING MONEY

           *       *       *       *       *       *       *



Subchapter II--Payments

           *       *       *       *       *       *       *



Sec. 3321. Disbursing authority in the executive branch

           *       *       *       *       *       *       *


Historical and Revision Notes

           *       *       *       *       *       *       *



                  [Fraud Reduction and Data Analytics


[SEC. 2. DEFINITIONS.

    [In this Act.--
          [(1) the term `agency' has the meaning given the term 
        in section 551 of title 5, United States Code; and
          [(2) the term `improper payment' has the meaning 
        given the term in section 2(g) of the Improper Payments 
        Information Act of 2002 [Pub. L. 107-300] (31 U.S.C. 
        3321 note).

[SEC. 3. ESTABLISHMENT OF FINANCIAL AND ADMINISTRATIVE CONTROLS 
                    RELATING TO FRAUD AND IMPROPER PAYMENTS.

    [(a) Guidelines.--
          [(1) In general.--Not later than 90 days after the 
        date of enactment of this Act [June 30, 2016], the 
        Director of the Office of Management and Budget, in 
        consultation with the Comptroller General of the United 
        States, shall establish guidelines for agencies to 
        establish financial and administrative controls to 
        identify and assess fraud risks and design and 
        implement control activities in order to prevent, 
        detect, and respond to fraud, including improper 
        payments.
          [(2) Contents.--The guidelines described in paragraph 
        (1) shall incorporate the leading practices identified 
        in the report published by the Government 
        Accountability Office on July 28, 2015, entitled 
        `Framework for Managing Fraud Risks in Federal 
        Programs'.
          [(3) Modification.--The Director of the Office of 
        Management and Budget, in consultation with the 
        Comptroller General of the United States, may 
        periodically modify the guidelines described in 
        paragraph (1) as the Director and Comptroller General 
        may determine necessary.
    [(b) Requirements for Controls.--The financial and 
administrative controls required to be established by agencies 
under subsection (a) shall include--
          [(1) conducting an evaluation of fraud risks and 
        using a risk-based approach to design and implement 
        financial and administrative control activities to 
        mitigate identified fraud risks;
          [(2) collecting and analyzing data from reporting 
        mechanisms on detected fraud to monitor fraud trends 
        and using that data and information to continuously 
        improve fraud prevention controls; and
          [(3) using the results of monitoring, evaluation, 
        audits, and investigations to improve fraud prevention, 
        detection, and response.
    [(c) Reports.--
          [(1) In general.--Except as provided in paragraph 
        (2), for each of the first 3 fiscal years beginning 
        after the date of enactment of this Act, each agency 
        shall submit to Congress, as part of the annual 
        financial report of the agency, a report on the 
        progress of the agency in--
                  [(A) implementing--
                          [(i) the financial and administrative 
                        controls required to be established 
                        under subsection (a);
                          [(ii) the fraud risk principle in the 
                        Standards for Internal Control in the 
                        Federal Government; and
                          [(iii) Office of Management and 
                        Budget Circular A-123 with respect to 
                        the leading practices for managing 
                        fraud risk;
                  [(B) identifying risks and vulnerabilities to 
                fraud, including with respect to payroll, 
                beneficiary payments, grants, large contracts, 
                and purchase and travel cards; and
                  [(C) establishing strategies, procedures, and 
                other steps to curb fraud.
          [(2) First report.--If the date of enactment of this 
        Act is less than 180 days before the date on which an 
        agency is required to submit the annual financial 
        report of the agency, the agency may submit the report 
        required under paragraph (1) as part of the following 
        annual financial report of the agency.

[SEC. 4. WORKING GROUP.

    [(a) Establishment.--Not later than 180 days after the date 
of enactment of this Act [June 30, 2016], the Office of 
Management and Budget shall establish a working group to 
improve--
          [(1) the sharing of financial and administrative 
        controls established under section 3(a) and other best 
        practices and techniques for detecting, preventing, and 
        responding to fraud, including improper payments; and
          [(2) the sharing and development of data analytics 
        techniques.
    [(b) Composition.--The working group established under 
subsection (a) shall be composed of--
          [(1) the Controller of the Office of Management and 
        Budget, who shall serve as Chairperson;
          [(2) the Chief Financial Officer of each agency; and
          [(3) any other party determined to be appropriate by 
        the Director of the Office of Management and Budget, 
        which may include the Chief Information Officer, the 
        Chief Procurement Officer, or the Chief Operating 
        Officer of each agency.
    [(c) Consultation.--The working group established under 
subsection (a) shall consult with Offices of Inspectors General 
and Federal and non-Federal experts on fraud risk assessments, 
financial controls, and other relevant matters.
    [(d) Meetings.--The working group established under 
subsection (a) shall hold not fewer than 4 meetings per year.
    [(e) Plan.--Not later than 270 days after the date of 
enactment of this Act, the working group established under 
subsection (a) shall submit to Congress a plan for the 
establishment and use of a Federal interagency library of data 
analytics and data sets, which can incorporate or improve upon 
existing Federal resources and capacities, for use by agencies 
and Offices of Inspectors General to facilitate the detection, 
prevention, and recovery of fraud, including improper 
payments.]

           *       *       *       *       *       *       *


                           [IMPROPER PAYMENTS


[SEC. 2. DEFINITIONS.

    [In this Act--
          [(1) the term `agency' means an executive agency as 
        that term is defined under section 102 of title 31, 
        United States Code;
          [(2) the term `improper payment' has the meaning 
        given that term in section 2(g) of the Improper 
        Payments Information Act of 2002 [Pub. L. 107-300] (31 
        U.S.C. 3321 note), as re-designated by section 3(a)(1) 
        of this Act; and
          [(3) the term `State' means each State of the United 
        States, the District of Columbia, each territory or 
        possession of the United States, and each federally 
        recognized Indian tribe.

[SEC. 3. IMPROVING THE DETERMINATION OF IMPROPER PAYMENTS BY FEDERAL 
                    AGENCIES.

    [(a) In General.--[Amended Pub. L. 107-300, set out below.]
    [(b) Improved Estimates.--
          [(1) In general.--Not later than 180 days after the 
        date of enactment of this Act [Jan. 10, 2013], the 
        Director of the Office of Management and Budget shall 
        provide guidance to agencies for improving the 
        estimates of improper payments under the Improper 
        Payments Information Act of 2002 [Pub. L. 107-300] (31 
        U.S.C. 3321 note).
          [(2) Guidance.--Guidance under this subsection 
        shall--
                  [(A) strengthen the estimation process of 
                agencies by setting standards for agencies to 
                follow in determining the underlying validity 
                of sampled payments to ensure amounts being 
                billed, paid, or obligated for payment are 
                proper;
                  [(B) instruct agencies to give the persons or 
                entities performing improper payments estimates 
                access to all necessary payment data, including 
                access to relevant documentation;
                  [(C) explicitly bar agencies from relying on 
                self-reporting by the recipients of agency 
                payments as the sole source basis for improper 
                payments estimates;
                  [(D) require agencies to include all 
                identified improper payments in the reported 
                estimate, regardless of whether the improper 
                payment in question has been or is being 
                recovered;
                  [(E) include payments to employees, including 
                salary, locality pay, travel pay, purchase card 
                use, and other employee payments, as subject to 
                risk assessment and, where appropriate, 
                improper payment estimation; and
                  [(F) require agencies to tailor their 
                corrective actions for the high-priority 
                programs identified under section 2(b)(1)(A) of 
                the Improper Payments Information Act of 2002 
                (31 U.S.C. 3321 note) to better reflect the 
                unique processes, procedures, and risks 
                involved in each specific program.
    [(c) Technical and Conforming Amendments.--[Amended 
sections 2(h), 3 of Pub. L. 111-204, set out below.]

[SEC. 4. IMPROPER PAYMENTS INFORMATION.

    [[Amended Pub. L. 107-300, set out below.]

[SEC. 5. DO NOT PAY INITIATIVE.

    [(a) Prepayment and Preaward Procedures.--
          [(1) In general.--Each agency shall review prepayment 
        and preaward procedures and ensure that a thorough 
        review of available databases with relevant information 
        on eligibility occurs to determine program or award 
        eligibility and prevent improper payments before the 
        release of any Federal funds.
          [(2) Databases.--At a minimum and before issuing any 
        payment and award, each agency shall review as 
        appropriate the following databases to verify 
        eligibility of the payment and award:
                  [(A) The death records maintained by the 
                Commissioner of Social Security.
                  [(B) The General Services Administration's 
                Excluded Parties List System.
                  [(C) The Debt Check Database of the 
                Department of the Treasury.
                  [(D) The Credit Alert System or Credit Alert 
                Interactive Voice Response System of the 
                Department of Housing and Urban Development.
                  [(E) The List of Excluded Individuals/
                Entities of the Office of Inspector General of 
                the Department of Health and Human Services.
                  [(F) Information regarding incarcerated 
                individuals maintained by the Commissioner of 
                Social Security under sections 202(x) and 
                1611(e) of the Social Security Act [42 U.S.C. 
                402(x), 1382(e)].
    [(b) Do Not Pay Initiative.--
          [(1) Establishment.--There is established the Do Not 
        Pay Initiative which shall include--
                  [(A) use of the databases described under 
                subsection (a)(2); and
                  [(B) use of other databases designated by the 
                Director of the Office of Management and Budget 
                in consultation with agencies and in accordance 
                with paragraph (2).
          [(2) Other databases.--In making designations of 
        other databases under paragraph (1)(B), the Director of 
        the Office of Management and Budget shall--
                  [(A) consider any database that substantially 
                assists in preventing improper payments; and
                  [(B) provide public notice and an opportunity 
                for comment before designating a database under 
                paragraph (1)(B).
          [(3) Access and review.--
                  [(A) In general.--For purposes of identifying 
                and preventing improper payments, each agency 
                shall have access to, and use of, the Do Not 
                Pay Initiative to verify payment or award 
                eligibility in accordance with subsection (a) 
                when the Director of the Office of Management 
                and Budget determines the Do Not Pay Initiative 
                is appropriately established for the agency.
                  [(B) Other entities.--States and any 
                contractor, subcontractor, or agent of a State, 
                and the judicial and legislative branches of 
                the United States (as defined in paragraphs (2) 
                and (3), respectively, of section 202(e) of 
                title 18, United States Code), shall have 
                access to, and use of, the Do Not Pay 
                Initiative for the purpose of verifying payment 
                or award eligibility for payments (as defined 
                in section 2(g)(3) of the Improper Payments 
                Information Act of 2002 (31 U.S.C. 3321 note)) 
                when, with respect to a State, the Director of 
                the Office of Management and Budget determines 
                that the Do Not Pay Initiative is appropriately 
                established for that State and any contractor, 
                subcontractor, or agent of the State, and, with 
                respect to the judicial and legislative 
                branches of the United States, when the 
                Director of the Office of Management and Budget 
                determines that the Do Not Pay Initiative is 
                appropriately established for the judicial 
                branch or the legislative branch, as 
                applicable.
                  [(C) Consistency with privacy act of 1974.--
                To ensure consistency with the principles of 
                section 552a of title 5, United States Code 
                (commonly known as the `Privacy Act of 1974'), 
                the Director of the Office of Management and 
                Budget may issue guidance that establishes 
                privacy and other requirements that shall be 
                incorporated into Do Not Pay Initiative access 
                agreements with States, including any 
                contractor, subcontractor, or agent of a State, 
                and the judicial and legislative branches of 
                the United States.
          [(4) Payment otherwise required.--When using the Do 
        Not Pay Initiative, an agency shall recognize that 
        there may be circumstances under which the law requires 
        a payment or award to be made to a recipient, 
        regardless of whether that recipient is identified as 
        potentially ineligible under the Do Not Pay Initiative.
          [(5) Annual report.--The Director of the Office of 
        Management and Budget shall submit to Congress an 
        annual report, which may be included as part of another 
        report submitted to Congress by the Director, regarding 
        the operation of the Do Not Pay Initiative, which 
        shall--
                  [(A) include an evaluation of whether the Do 
                Not Pay Initiative has reduced improper 
                payments or improper awards; and
                  [(B) provide the frequency of corrections or 
                identification of incorrect information.
    [(c) Database Integration Plan.--Not later than 60 days 
after the date of enactment of this Act [Jan. 10, 2013], the 
Director of the Office of Management and Budget shall provide 
to the Congress a plan for--
          [(1) inclusion of other databases on the Do Not Pay 
        Initiative;
          [(2) to the extent permitted by law, agency access to 
        the Do Not Pay Initiative; and
          [(3) the data use agreements described under 
        subsection (e)(2)(D).
    [(d) Initial Working System.--
          [(1) Establishment.--Not later than 90 days after the 
        date of enactment of this Act, the Director of the 
        Office of Management and Budget shall establish a 
        working system for prepayment and preaward review that 
        includes the Do Not Pay Initiative as described under 
        this section.
          [(2) Working system.--The working system established 
        under paragraph (1)--
                  [(A) may be located within an appropriate 
                agency;
                  [(B) shall include not less than 3 agencies 
                as users of the system;
                  [(C) shall include investigation activities 
                for fraud and systemic improper payments 
                detection through analytic technologies and 
                other techniques, which may include commercial 
                database use or access; and
                  [(D) may include States and their quasi-
                government entities, and the judicial and 
                legislative branches of the United States (as 
                defined in paragraphs (2) and (3), 
                respectively, of section 202(e) of title 18, 
                United States Code) as users of the system in 
                accordance with subsection (b)(3).
          [(3) Application to all agencies.--Not later than 
        June 1, 2013, each agency shall review all payments and 
        awards for all programs of that agency through the 
        system established under this subsection.
    [(e) Facilitating Data Access by Federal Agencies and 
Offices of Inspectors General for Purposes of Program 
Integrity.--
          [(1) Definition.--In this subsection, the term 
        `Inspector General' means any Inspector General 
        described in subparagraph (A), (B), or (I) of section 
        11(b)(1) of the Inspector General Act of 1978 (5 U.S.C. 
        App.) and any successor Inspector General.
          [(2) Computer matching by federal agencies for 
        purposes of investigation and prevention of improper 
        payments and fraud.--
                  [(A) In general.--Except as provided in this 
                paragraph, in accordance with section 552a of 
                title 5, United States Code (commonly known as 
                the Privacy Act of 1974), each Inspector 
                General and the head of each agency may enter 
                into computer matching agreements with other 
                inspectors general and agency heads that allow 
                ongoing data matching (which shall include 
                automated data matching) in order to assist in 
                the detection and prevention of improper 
                payments.
                  [(B) Review.--Not later than 60 days after a 
                proposal for an agreement under subparagraph 
                (A) has been presented to a Data Integrity 
                Board established under section 552a(u) of 
                title 5, United States Code, for consideration, 
                the Data Integrity Board shall respond to the 
                proposal.
                  [(C) Termination date.--An agreement under 
                subparagraph (A)--
                          [(i) shall have a termination date of 
                        less than 3 years; and
                          [(ii) during the 3-month period 
                        ending on the date on which the 
                        agreement is scheduled to terminate, 
                        may be renewed by the agencies entering 
                        the agreement for not more than 3 
                        years.
                  [(D) Multiple agencies.--For purposes of this 
                paragraph, section 552a(o)(1) of title 5, 
                United States Code, shall be applied by 
                substituting `between the source agency and the 
                recipient agency or non-Federal agency or an 
                agreement governing multiple agencies' for 
                `between the source agency and the recipient 
                agency or non-Federal agency' in the matter 
                preceding subparagraph (A).
                  [(E) Cost-benefit analysis.--A justification 
                under section 552a(o)(1)(B) of title 5, United 
                States Code, relating to an agreement under 
                subparagraph (A) is not required to contain a 
                specific estimate of any savings under the 
                computer matching agreement.
          [(3) Guidance of the office of management and 
        budget.--Not later than 6 months after the date of 
        enactment of this Act, and in consultation with the 
        Council of the Inspectors General on Integrity and 
        Efficiency, the Secretary of Health and Human Services, 
        the Commissioner of Social Security, and the head of 
        any other relevant agency, the Director of the Office 
        of Management and Budget shall--
                  [(A) issue guidance for agencies regarding 
                implementing this subsection, which shall 
                include standards for--
                          [(i) reimbursement of costs, when 
                        necessary, between agencies;
                          [(ii) retention and timely 
                        destruction of records in accordance 
                        with section 552a(o)(1)(F) of title 5, 
                        United States Code; and
                          [(iii) prohibiting duplication and 
                        redisclosure of records in accordance 
                        with section 552a(o)(1)(H) of title 5, 
                        United States Code;
                  [(B) review the procedures of the Data 
                Integrity Boards established under section 
                552a(u) of title 5, United States Code, and 
                develop new guidance for the Data Integrity 
                Boards to--
                          [(i) improve the effectiveness and 
                        responsiveness of the Data Integrity 
                        Boards;
                          [(ii) ensure privacy protections in 
                        accordance with section 552a of title 
                        5, United States Code (commonly known 
                        as the Privacy Act of 1974); and
                          [(iii) establish standard matching 
                        agreements for use when appropriate; 
                        and
                  [(C) establish and clarify rules regarding 
                what constitutes making an agreement entered 
                under paragraph (2)(A) available upon request 
                to the public for purposes of section 
                552a(o)(2)(A)(ii) of title 5, United States 
                Code, which shall include requiring publication 
                of the agreement on a public website.
          [(4) Corrections.--The Director of the Office of 
        Management and Budget shall establish procedures 
        providing for the correction of data in order to 
        ensure--
                  [(A) compliance with section 552a(p) of title 
                5, United States Code; and
                  [(B) that corrections are made in any Do Not 
                Pay Initiative database and in any relevant 
                source databases designated by the Director of 
                the Office of Management and Budget under 
                subsection (b)(1).
          [(5) Compliance.--The head of each agency, in 
        consultation with the Inspector General of the agency, 
        shall ensure that any information provided to an 
        individual or entity under this subsection is provided 
        in accordance with protocols established under this 
        subsection.
          [(6) Rule of construction.--Nothing in this 
        subsection shall be construed to affect the rights of 
        an individual under section 552a(p) of title 5, United 
        States Code.
    [(f) Development and Access to a Database of Incarcerated 
Individuals.--Not later than 1 year after the date of enactment 
of this Act, the Attorney General shall submit to Congress 
recommendations for increasing the use of, access to, and the 
technical feasibility of using data on the Federal, State, and 
local conviction and incarceration status of individuals for 
purposes of identifying and preventing improper payments by 
Federal agencies and programs and fraud.
    [(g) Plan To Curb Federal Improper Payments to Deceased 
Individuals by Improving the Quality and Use by Federal 
Agencies of the Social Security Administration Death Master 
File.--
          [(1) Establishment.--In conjunction with the 
        Commissioner of Social Security and in consultation 
        with relevant stakeholders that have an interest in or 
        responsibility for providing the data, and the States, 
        the Director of the Office of Management and Budget 
        shall establish a plan for improving the quality, 
        accuracy, and timeliness of death data maintained by 
        the Social Security Administration, including death 
        information reported to the Commissioner under section 
        205(r) of the Social Security Act (42 U.S.C. 405(r)).
          [(2) Additional actions under plan.--The plan 
        established under this subsection shall include 
        recommended actions by agencies to--
                  [(A) increase the quality and frequency of 
                access to the Death Master File and other death 
                data;
                  [(B) achieve a goal of at least daily access 
                as appropriate;
                  [(C) provide for all States and other data 
                providers to use improved and electronic means 
                for providing data;
                  [(D) identify improved methods by agencies 
                for determining ineligible payments due to the 
                death of a recipient through proactive 
                verification means; and
                  [(E) address improper payments made by 
                agencies to deceased individuals as part of 
                Federal retirement programs.
          [(3) Report.--Not later than 120 days after the date 
        of enactment of this Act, the Director of the Office of 
        Management and Budget shall submit a report to Congress 
        on the plan established under this subsection, 
        including recommended legislation.
    [(h) Report on Improper Payments Data Analysis.--Not later 
than 180 days after the date of enactment of the Federal 
Improper Payments Coordination Act of 2015 [Dec. 18, 2015], the 
Secretary of the Treasury shall submit to Congress a report 
which shall include a description of--
          [(1) data analytics performed as part of the Do Not 
        Pay Business Center operated by the Department of the 
        Treasury for the purpose of detecting, preventing, and 
        recovering improper payments through preaward, 
        postaward prepayment, and postpayment analysis, which 
        shall include a description of any analysis or 
        investigations incorporating--
                  [(A) review and data matching of payments and 
                beneficiary enrollment lists of State programs 
                carried out using Federal funds for the 
                purposes of identifying eligibility 
                duplication, residency ineligibility, duplicate 
                payments, or other potential improper payment 
                issues;
                  [(B) review of multiple Federal agencies and 
                programs for which comparison of data could 
                show payment duplication; and
                  [(C) review of other information the 
                Secretary of the Treasury determines could 
                prove effective for identifying, preventing, or 
                recovering improper payments, which may include 
                investigation or review of information from 
                multiple Federal agencies or programs;
          [(2) the metrics used in determining whether the 
        analytic and investigatory efforts have reduced, or 
        contributed to the reduction of, improper payments or 
        improper awards; and
          [(3) the target dates for implementing the data 
        analytics operations performed as part of the Do Not 
        Pay Business Center[.]

[SEC. 6. IMPROVING RECOVERY OF IMPROPER PAYMENTS.

    [(a) Definition.--In this section, the term `recovery 
audit' means a recovery audit described under section 2(h) of 
the Improper Payments Elimination and Recovery Act of 2010 
[Pub. L. 111-204] (31 U.S.C. 3301 note).
    [(b) Review.--The Director of the Office of Management and 
Budget shall determine--
          [(1) current and historical rates and amounts of 
        recovery of improper payments (or, in cases in which 
        improper payments are identified solely on the basis of 
        a sample, recovery rates and amounts estimated on the 
        basis of the applicable sample), including a list of 
        agency recovery audit contract programs and specific 
        information of amounts and payments recovered by 
        recovery audit contractors; and
          [(2) targets for recovering improper payments, 
        including specific information on amounts and payments 
        recovered by recovery audit contractors.

[SEC. 7. IMPROVING THE USE OF DATA BY GOVERNMENT AGENCIES FOR CURBING 
                    IMPROPER PAYMENTS.

    [(a) Prompt Reporting of Death Information by the 
Department of State and the Department of Defense.--Not later 
than 1 year after the date of enactment of this section [Dec. 
18, 2015], the Secretary of State and the Secretary of Defense 
shall establish a procedure under which each Secretary shall, 
promptly and on a regular basis, submit information relating to 
the deaths of individuals to each agency for which the Director 
of the Office of Management and Budget determines receiving and 
using such information would be relevant and necessary.
    [(b) Guidance to Agencies Regarding Data Access and Use for 
Improper Payments Purposes.--
          [(1) In general.--Not later than 1 year after the 
        date of enactment of this section, the Director of the 
        Office of Management and Budget, in consultation with 
        the Council of the Inspectors General on Integrity and 
        Efficiency, the heads of other relevant Federal, State, 
        and local agencies, and Indian tribes and tribal 
        organizations, as appropriate, shall issue guidance 
        regarding implementation of the Do Not Pay Initiative 
        under section 5 to--
                  [(A) the Department of the Treasury; and
                  [(B) each agency or component of an agency--
                          [(i) that operates or maintains a 
                        database of information described in 
                        section 5(a)(2); or
                          [(ii) for which the Director 
                        determines improved data matching would 
                        be relevant, necessary, or beneficial.
          [(2) Requirements.--The guidance issued under 
        paragraph (1) shall--
                  [(A) address the implementation of subsection 
                (a); and
                  [(B) include the establishment of deadlines 
                for access to and use of the databases 
                described in section 5(a)(2) under the Do Not 
                Pay Initiative.]

           *       *       *       *       *       *       *


                           [IMPROPER PAYMENTS


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

    [(a) Identification of Susceptible Programs and 
Activities.--
          [(1) In general.--The head of each agency shall, in 
        accordance with guidance prescribed by the Director of 
        the Office of Management and Budget, periodically 
        review all programs and activities that the relevant 
        agency head administers and identify all programs and 
        activities that may be susceptible to significant 
        improper payments.
          [(2) Frequency.--Reviews under paragraph (1) shall be 
        performed for each program and activity that the 
        relevant agency head administers during the year after 
        which the Improper Payments Elimination and Recovery 
        Act of 2010 is enacted [July 22, 2010] and at least 
        once every 3 fiscal years thereafter. For those 
        agencies already performing a risk assessment every 3 
        years, agencies may apply to the Director of the Office 
        of Management and Budget for a waiver from the 
        requirement of the preceding sentence and continue 
        their 3-year risk assessment cycle.
          [(3) Risk assessments.--
                  [(A) Definition.--In this subsection the term 
                `significant' means--
                          [(i) except as provided under clause 
                        (ii), that improper payments in the 
                        program or activity in the preceding 
                        fiscal year may have exceeded--
                                  [(I) $10,000,000 of all 
                                program or activity payments 
                                made during that fiscal year 
                                reported and 2.5 percent of 
                                program outlays; or
                                  [(II) $100,000,000; and
                          [(ii) with respect to fiscal year 
                        2014 and each fiscal year thereafter, 
                        that improper payments in the program 
                        or activity in the preceding fiscal 
                        year may have exceeded--
                                  [(I) $10,000,000 of all 
                                program or activity payments 
                                made during that fiscal year 
                                reported and 1.5 percent of 
                                program outlays; or
                                  [(II) $100,000,000.
                  [(B) Scope.--In conducting the reviews under 
                paragraph (1), the head of each agency shall 
                take into account those risk factors that are 
                likely to contribute to a susceptibility to 
                significant improper payments, such as--
                          [(i) whether the program or activity 
                        reviewed is new to the agency;
                          [(ii) the complexity of the program 
                        or activity reviewed;
                          [(iii) the volume of payments made 
                        through the program or activity 
                        reviewed;
                          [(iv) whether payments or payment 
                        eligibility decisions are made outside 
                        of the agency, such as by a State or 
                        local government;
                          [(v) recent major changes in program 
                        funding, authorities, practices, or 
                        procedures;
                          [(vi) the level, experience, and 
                        quality of training for personnel 
                        responsible for making program 
                        eligibility determinations or 
                        certifying that payments are accurate; 
                        and
                          [(vii) significant deficiencies in 
                        the audit report of the agency or other 
                        relevant management findings that might 
                        hinder accurate payment certification.
    [(b) Estimation of Improper Payments.--With respect to each 
program and activity identified under subsection (a), the head 
of the relevant agency shall--
          [(1) produce a statistically valid estimate, or an 
        estimate that is otherwise appropriate using a 
        methodology approved by the Director of the Office of 
        Management and Budget, of the improper payments made by 
        each program and activity; and
          [(2) include those estimates in the accompanying 
        materials to the annual financial statement of the 
        agency required under section 3515 of title 31, United 
        States Code, or similar provision of law and applicable 
        guidance of the Office of Management and Budget.
    [(c) Reports on Actions To Reduce Improper Payments.--With 
respect to any program or activity of an agency with estimated 
improper payments under subsection (c), the head of the agency 
shall provide with the estimate under subsection (c) a report 
on what actions the agency is taking to reduce improper 
payments, including--
          [(1) a description of the causes of the improper 
        payments, actions planned or taken to correct those 
        causes, and the planned or actual completion date of 
        the actions taken to address those causes;
          [(2) in order to reduce improper payments to a level 
        below which further expenditures to reduce improper 
        payments would cost more than the amount such 
        expenditures would save in prevented or recovered 
        improper payments, a statement of whether the agency 
        has what is needed with respect to--
                  [(A) internal controls;
                  [(B) human capital; and
                  [(C) information systems and other 
                infrastructure;
          [(3) if the agency does not have sufficient resources 
        to establish and maintain effective internal controls 
        under paragraph (2)(A), a description of the resources 
        the agency has requested in its budget submission to 
        establish and maintain such internal controls;
          [(4) program-specific and activity-specific improper 
        payments reduction targets that have been approved by 
        the Director of the Office of Management and Budget; 
        and
          [(5) a description of the steps the agency has taken 
        to ensure that agency managers, programs, and, where 
        appropriate, States and localities are held accountable 
        through annual performance appraisal criteria for--
                  [(A) meeting applicable improper payments 
                reduction targets; and
                  [(B) establishing and maintaining sufficient 
                internal controls, including an appropriate 
                control environment, that effectively--
                          [(i) prevent improper payments from 
                        being made; and
                          [(ii) promptly detect and recover 
                        improper payments that are made.
    [(d) Reports on Actions To Recover Improper Payments.--With 
respect to any improper payments identified in recovery audits 
conducted under section 2(h) of the Improper Payments 
Elimination and Recovery Act of 2010 [Pub. L. 111-204] (31 
U.S.C. 3321 note), the head of the agency shall provide with 
the estimate under subsection (c) a report on all actions the 
agency is taking to recover improper payments, including--
          [(1) a discussion of the methods used by the agency 
        to recover overpayments;
          [(2) the amounts recovered, outstanding, and 
        determined to not be collectable, including the percent 
        such amounts represent of the total overpayments of the 
        agency;
          [(3) if a determination has been made that certain 
        overpayments are not collectable, a Justification of 
        that determination;
          [(4) an aging schedule of the amounts outstanding;
          [(5) a summary of how recovered amounts have been 
        disposed of;
          [(6) a discussion of any conditions giving rise to 
        improper payments and how those conditions are being 
        resolved; and
          [(7) if the agency has determined under section 2(h) 
        of the Improper Payments Elimination and Recovery Act 
        of 2010 (31 U.S.C. 3321 note) that performing recovery 
        audits for any applicable program or activity is not 
        cost-effective, a justification for that determination.
    [(e) Government-Wide Reporting of Improper Payments and 
Actions To Recover Improper Payments.--
          [(1) Report.--Each fiscal year the Director of the 
        Office of Management and Budget shall submit a report 
        with respect to the preceding fiscal year on actions 
        agencies have taken to report information regarding 
        improper payments and actions to recover improper 
        overpayments to--
                  [(A) the Committee on Homeland Security and 
                Governmental Affairs of the Senate; and
                  [(B) the Committee on Oversight and 
                Government Reform of the House of 
                Representatives.
          [(2) Contents.--Each report under this subsection 
        shall include--
                  [(A) a summary of the reports of each agency 
                on improper payments and recovery actions 
                submitted under this section;
                  [(B) an identification of the compliance 
                status of each agency to which this Act 
                applies;
                  [(C) government-wide improper payment 
                reduction targets; and
                  [(D) a discussion of progress made towards 
                meeting government-wide improper payment 
                reduction targets.
    [(f) Definitions.--In 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 good 
                or service, any duplicate payment, any payment 
                for a good or service not received (except for 
                such payments where authorized by law), and any 
                payment that does not account for credit for 
                applicable discounts.
          [(3) Payment.--The term `payment' means any transfer 
        or commitment for future transfer of Federal funds such 
        as cash, securities, loans, loan guarantees, and 
        insurance subsidies to any non-Federal person or entity 
        or a Federal employee, that is made by a Federal 
        agency, a Federal contractor, a Federal grantee, or a 
        governmental or other organization administering a 
        Federal program or activity.
          [(4) Payment for an ineligible good or service.--The 
        term `payment for an ineligible good or service' shall 
        include a payment for any good or service that is 
        rejected under any provision of any contract, grant, 
        lease, cooperative agreement, or any other funding 
        mechanism.
    [(g) Guidance by the Office of Management and Budget.--
          [(1) In general.--Not later than 6 months after the 
        date of enactment of the Improper Payments Elimination 
        and Recovery Act of 2010 [July 22, 2010], the Director 
        of the Office of Management and Budget shall prescribe 
        guidance for agencies to implement the requirements of 
        this section. The guidance shall not include any 
        exemptions to such requirements not specifically 
        authorized by this section.
          [(2) Contents.--The guidance under paragraph (1) 
        shall prescribe--
                  [(A) the form of the reports on actions to 
                reduce improper payments, recovery actions, and 
                government-wide reporting; and
                  [(B) strategies for addressing risks and 
                establishing appropriate prepayment and post-
                payment internal controls.'']

           *       *       *       *       *       *       *


                    Subchapter IV--Improper Payments

3351. Definitions.
3352. Estimates of improper payments and reports on actions to reduce 
          improper payments.
3353. Compliance.
3354. Do Not Pay Initiative.
3355. Improving recovery of improper payments.
3356. Improving the use of data by executive agencies for curbing 
          improper payments.
3357. Financial and administrative controls relating to fraud and 
          improper payments.
3358. Interagency working group for Governmentwide payment integrity 
          improvement.

SEC. 3351. DEFINITIONS.

    In this subchapter:
          (1) Annual financial statement.--The term `annual 
        financial statement' means the annual financial 
        statement required under section 3515 of this title or 
        similar provision of law.
          (2) Compliance.--The term `compliance' means that an 
        executive agency--
                  (A) has--
                          (i) published improper payments 
                        information with the annual financial 
                        statement of the executive agency for 
                        the most recent fiscal year; and
                          (ii) posted on the website of the 
                        executive agency that statement and any 
                        accompanying materials required under 
                        guidance of the Office of Management 
                        and Budget;
                  (B) if required, has conducted a program 
                specific risk assessment for each program or 
                activity that conforms with the requirements 
                under section 3352(a);
                  (C) if required, publishes improper payments 
                estimates for all programs and activities 
                identified under section 3352(a) in the 
                accompanying materials to the annual financial 
                statement;
                  (D) publishes programmatic corrective action 
                plans prepared under section 3352(d) that the 
                executive agency may have in the accompanying 
                materials to the annual financial statement;
                  (E) publishes improper payments reduction 
                targets established under section 3352(d) that 
                the executive agency may have in the 
                accompanying materials to the annual financial 
                statement for each program or activity assessed 
                to be at risk, and has demonstrated 
                improvements and developed a plan to meet the 
                reduction targets, and
                  (F) has reported an improper payment rate of 
                less than 10 percent for each program and 
                activity for which an estimate was published 
                under section 3352(c).
          (3) Do not pay initiative.--The term `Do Not Pay 
        Initiative' means the initiative described in section 
        3354(b).
          (4) 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 an overpayment or 
                underpayment, under a statutory, contractual, 
                administrative, or other legally applicable 
                requirement; and
                  (B) includes--
                          (i) any payment to an ineligible 
                        recipient;
                          (ii) any payment for an ineligible 
                        good or service;
                          (iii) any duplicative payment;
                          (iv) any payment for a good or 
                        service not received, except for those 
                        payments where authorized by law; and
                          (v) any payment that does not account 
                        for credit for applicable discounts.
          (5) Payment.--The term `payment' means any transfer 
        or commitment for future transfer of Federal funds such 
        as cash, securities, loans, loan guarantees, and 
        insurance subsidies to any non-Federal person or entity 
        or a Federal contractor, a Federal grantee, or a 
        governmental or other organization administering a 
        Federal program or activity.
          (6) Payment for an ineligible good or service.--The 
        term `payment for an ineligible good or service' 
        includes a payment for any good or service that is 
        rejected under any provision of any contract, grant, 
        lease, cooperative agreement, or other funding 
        mechanism.
          (7) Recovery audit.--The term `recovery audit' means 
        a recovery audit described in section 3352(i).
          (8) State.--The term `State' means each State of the 
        United States, the District of Columbia, each territory 
        or possession of the United States, and each Federally 
        recognized Indian tribe.

SEC. 3352. ESTIMATES OF IMPROPER PAYMENTS AND REPORTS ON ACTIONS TO 
                    REDUCE IMPROPER PAYMENTS.

    (a) Identification of Susceptible Programs and 
Activities.--
          (1) In general.--The head of each executive agency 
        shall, in accordance with guidance prescribed by the 
        Director of the Office of Management and Budget--
                  (A) periodically review all programs and 
                activities that the head of the executive 
                agency administers; and
                  (B) identify all programs and activities with 
                outlays exceeding the statutory threshold 
                dollar amount described in paragraph (3)(A)(i) 
                that may be susceptible to significant improper 
                payments.
          (2) Frequency.--A review under paragraph (1) shall be 
        performed for each program and activity that the head 
        of an executive agency administers not less frequently 
        than once every 3 fiscal years.
          (3) Risk assessments.--
                  (A) Definition of significant.--In this 
                paragraph, the term `significant' means that, 
                in the preceding fiscal year, the sum of a 
                program or activity's improper payments and 
                payments whose propriety cannot be determined 
                by the executive agency due to lacking or 
                insufficient documentation may have exceeded--
                          (i) $10,000,000 of all reported 
                        program or activity payments of the 
                        executive agency made during that 
                        fiscal year and 1.5 percent of program 
                        outlays; or
                          (ii) $100,000,000.
                  (B) Scope.--In conducting a review under 
                paragraph (1), the head of each executive 
                agency shall take into account those risk 
                factors that are likely to contribute to a 
                susceptibility to significant improper 
                payments, such as--
                          (i) whether the program or activity 
                        reviewed is new to the executive 
                        agency;
                          (ii) the complexity of the program or 
                        activity reviewed;
                          (iii) the volume of payments made 
                        through the program or activity 
                        reviewed;
                          (iv) whether payments or payment 
                        eligibility decisions are made outside 
                        of the executive agency, such as by a 
                        State or local government;
                          (v) recent major changes in program 
                        funding, authorities, practices, or 
                        procedures;
                          (vi) the level, experience, and 
                        quality of training for personnel 
                        responsible for making program 
                        eligibility determinations or 
                        certifying that payments are accurate;
                          (vii) significant deficiencies in the 
                        audit report of the executive agency or 
                        other relevant management findings that 
                        might hinder accurate payment 
                        certification;
                          (viii) similarities to other programs 
                        or activities that have reported 
                        improper payment estimates or been 
                        deemed susceptible to significant 
                        improper payments;
                          (ix) the accuracy and reliability of 
                        improper payment estimates previously 
                        reported for the program or activity, 
                        or other indicator of potential 
                        susceptibility to improper payments 
                        identified by the Inspector General of 
                        the executive agency, the Government 
                        Accountability Office, other audits 
                        performed by or on behalf of the 
                        Federal, State, or local government, 
                        disclosures by the executive agency, or 
                        any other means;
                          (x) whether the program or activity 
                        lacks information or data systems to 
                        confirm eligibility or provide for 
                        other payment integrity needs; and
                          (xi) the risk of fraud as assessed by 
                        the executive agency under the 
                        Standards for Internal Control in the 
                        Federal Government published by the 
                        Government Accountability Office 
                        (commonly known as the `Green Book').
                  (C) Annual report.--Each executive agency 
                shall publish an annual report that includes--
                          (i) a listing of each program or 
                        activity identified under paragraph 
                        (1), including the date on which the 
                        program or activity was most recently 
                        assessed for risk under paragraph (1); 
                        and
                          (ii) a listing of any program or 
                        activity for which the executive agency 
                        makes any substantial changes to the 
                        methodologies of the reviews conducted 
                        under paragraph (1).
    (b) Improving the Determination of Improper Payments.--
          (1) In general.--The Director of the Office of 
        Management and Budget shall on an annual basis--
                  (A) identify a list of high-priority Federal 
                programs for greater levels of oversight and 
                review--
                          (i) in which the highest dollar value 
                        or highest rate of improper payments 
                        occur; or
                          (ii) for which there is a higher risk 
                        of improper payments; and
                  (B) in coordination with the executive agency 
                responsible for administering a high priority 
                program identified under subparagraph (A), 
                establish annual targets and semi-annual or 
                quarterly actions for reducing improper 
                payments associated with the high-priority 
                program.
          (2) Report on high-priority improper payments.--
                  (A) In general.--Subject to Federal privacy 
                policies and to the extent permitted by law, 
                each executive agency with a program identified 
                under paragraph (1)(A) shall on an annual basis 
                submit to the Inspector General of the 
                executive agency and the Office of Management 
                and Budget, and make available to the public, 
                including through a website, a report on that 
                program.
                  (B) Contents.--Each report submitted under 
                subparagraph (A)--
                          (i) shall describe any action the 
                        executive agency--
                                  (I) has taken or plans to 
                                take to recover improper 
                                payments, and
                                  (II) intends to take to 
                                prevent future improper 
                                payments; and
                          (ii) shall not include--
                                  (I) any referrals the 
                                executive agency made or 
                                anticipates making to the 
                                Department of Justice; or
                                  (II) any information provided 
                                in connection with a referral 
                                described in subclause (I).
                  (C) Public availability on central website.--
                The Office of Management and Budget shall make 
                each report submitted under subparagraph (A) 
                available on a central website.
                  (D) Availability of information to inspector 
                general.--Subparagraph (B)(ii) shall not 
                prohibit any referral or information being made 
                available to an Inspector General as otherwise 
                provided by law.
                  (E) Assessment and recommendation.--The 
                Inspector General of each executive agency that 
                submits a report under subparagraph (A) shall, 
                for each program of the executive agency, that 
                is identified under paragraph (1)(A)--
                          (i) review--
                                  (I) the assessment of the 
                                level of risk associated with 
                                the program and the quality of 
                                the improper payment estimates 
                                and methodology of the 
                                executive agency relating to 
                                the program; and
                                  (II) the oversight or 
                                financial controls to identify 
                                and prevent improper payments 
                                under the program; and
                          (ii) submit to the appropriate 
                        authorizing and appropriations 
                        committees of Congress recommendations, 
                        which may be included in another report 
                        submitted by the Inspector General to 
                        Congress, for modifying any plans of 
                        the executive agency relating to the 
                        program, including improvements for 
                        improper payments determination and 
                        estimation methodology.
                  (F) Annual meeting.--Not less frequently than 
                once every year, the head of each executive 
                agency with a program identified under 
                paragraph (1)(A), or a designee of the head of 
                the executive agency, shall meet with the 
                Director of the Office of Management and 
                Budget, or a designee of the Director, to 
                report on actions taken during the preceding 
                year and planned actions to prevent improper 
                payments.
    (c) Estimation of Improper Payments.--
          (1) Estimation.--With respect to each program and 
        activity identified under subsection (a)(1), the head 
        of the relevant executive agency shall--
                  (A) produce a statistically valid estimate, 
                or an estimate that is otherwise appropriate 
                using a methodology approved by the Director of 
                the Office of Management and Budget, of the 
                improper payments made by the program or 
                activity; and
                  (B) include the estimates described in 
                subparagraph (A) in the accompanying materials 
                to the annual financial statement of the 
                executive agency and as required in applicable 
                guidance of the Office of Management and 
                Budget.
          (2) Lacking or insufficient documentation.--
                  (A) In general.--For the purpose of producing 
                an estimate under paragraph (1), when the 
                executive agency cannot determine, due to 
                lacking or insufficient documentation, whether 
                a payment is proper or not, the payment shall 
                be treated as an improper payment.
                  (B) Separate report.--The head of an 
                executive agency may report separately on what 
                portion of the improper payments estimate for a 
                program or activity of the executive agency 
                under paragraph (1) is attributable to lacking 
                or insufficient documentation.
    (d) Reports on Actions To Reduce Improper Payments.--With 
respect to any program or activity of an executive agency with 
estimated improper payments under subsection (c) a report on 
what actions the executive agency is taking to reduce improper 
payments, including--
          (1) a description of the causes of the improper 
        payments, actions planned or taken to correct those 
        causes, and the planned or actual completion date of 
        the actions taken to address those causes;
          (2) in order to reduce improper payments to a level 
        below which further expenditures to reduce improper 
        payments would cost more than the amount those 
        expenditures would save in prevented or recovered 
        improper payments, a statement of whether the executive 
        agency has what is needed with respect to--
                  (A) internal controls;
                  (B) human capital;
                  (C) information systems and other 
                infrastructure;
          (3) if the executive agency does not have sufficient 
        resources to establish and maintain effective internal 
        controls as described in paragraph (2)(A), a 
        description of the resources the executive agency has 
        requested in the budget submission of the executive 
        agency to establish and maintain those internal 
        controls;
          (4) program-specific and activity-specific improper 
        payments reduction targets that have been approved by 
        the Director of the Office of Management and Budget;
          (5) a description of the steps the executive agency 
        has taken to ensure that executive agency managers, 
        programs, and, where appropriate, States and local 
        governments are held accountable through annual 
        performance appraisal criteria for--
                  (A) meeting applicable improper payment 
                reduction targets; and
                  (B) establishing and maintaining sufficient 
                internal controls, including an appropriate 
                control environment, that effectively--
                          (i) prevent improper payments from 
                        being made; and
                          (ii) promptly detect and recover 
                        improper payments that are made; and
          (6) a description of how the level of planned or 
        completed actions by the executive agency to address 
        the causes of the improper payments matches the level 
        of improper payments, including a breakdown by category 
        of improper payments and specific timelines for 
        completion of those actions.
    (e) Reports on Actions To Recover Improper Payments.--With 
respect to improper payments identified in a recovery audit, 
the head of the executive agency shall provide with the 
estimate required under subsection (c) a report on all actions 
the executive agency is taking to recover the improper 
payments, including--
          (1) a discussion of the methods used by the executive 
        agency to recover improper payments;
          (2) the amounts recovered, outstanding, and 
        determined to not be collectable, including the percent 
        those amounts represent of the total improper payments 
        of the executive agency;
          (3) if a determination has been made that certain 
        improper payments are not collectable, a justification 
        of that determination;
          (4) an aging schedule of the amounts outstanding;
          (5) a summary of how recovered amounts have been 
        disposed of;
          (6) a discussion of any conditions giving rise to 
        improper payments and how those conditions are being 
        resolved; and
          (7) if the executive agency has determined under 
        subsection (i) that performing recovery audits for any 
        applicable program or activity is not cost-effective, a 
        justification for that determination.
    (f) Governmentwide Reporting of Improper Payments and 
Actions To Recover Improper Payments.--
          (1) Report.--Each fiscal year, the Director of the 
        Office of Management and Budget shall submit a report 
        with respect to the preceding fiscal year on actions 
        that executive agencies have taken to report 
        information regarding improper payments and actions to 
        recover overpayments to--
                  (A) the Committee on Homeland Security and 
                Governmental Affairs of the Senate;
                  (B) the Committee on Oversight and Government 
                Reform of the House of Representatives; and
                  (C) the Comptroller General of the United 
                States.
          (2) Contents.--Each report required under paragraph 
        (1) shall include--
                  (A) a summary of the reports of each 
                executive agency on improper payments and 
                recovery actions submitted under this section;
                  (B) an identification of the compliance 
                status of each executive agency, as determined 
                by the Inspector General of the executive 
                agency under section 3353, to which this 
                section applies;
                  (C) Governmentwide improper payment reduction 
                targets;
                  (D) a Governmentwide estimate of improper 
                payments; and
                  (E) a discussion of progress made towards 
                meeting Government-wide improper payment 
                reduction targets.
    (g) Guidance by the Office of Management and Budget.--
          (1) In general.--Not later than 1 year after the date 
        of enactment of this section, the Director of the 
        Office of Management and Budget shall prescribe 
        guidance for executive agencies to implement the 
        requirements of this section, which shall not include 
        any exemptions to those requirements that are not 
        specifically authorized by this section.
          (2) Contents.--The guidance under paragraph (1) shall 
        prescribe--
                  (A) the form of the reports on actions to 
                reduce improper payments, recovery actions, and 
                Government wide reporting; and
                  (B) strategies for addressing risks and 
                establishing appropriate prepayment and post 
                payment internal controls.
    (h) Determinations of Agency Readiness for Opinion on 
Internal Control.--The criteria required to be developed under 
section 2(g) of the Improper Payments Elimination and Recovery 
Act of 2010, as in effect on the day before the date of 
enactment of this section--
          (1) shall continue to be in effect on and after the 
        date of enactment of this section; and
          (2) may be modified as determined appropriate by the 
        Director of the Office of Management and Budget.
    (i) Recovery Audits.--
          (1) In general.--
                  (A) Conduct of audits.--Except as provided 
                under paragraph (3) and if not prohibited under 
                any other provision of law, the head of each 
                executive agency shall conduct recovery audits 
                with respect to each program and activity of 
                the executive agency that expends $1,000,000 or 
                more annually if conducting the audits would be 
                cost effective.
                  (B) Procedures.--In conducting a recovery 
                audit under this subsection, the head of an 
                executive agency--
                          (i) shall give priority to the most 
                        recent payments and to payments made in 
                        any program identified as susceptible 
                        to significant improper payments under 
                        subsection (a);
                          (ii) shall implement this subsection 
                        in a manner designed to ensure the 
                        greatest financial benefit to the 
                        Federal Government; and
                          (iii) may conduct the recovery audit 
                        directly, by using other departments 
                        and agencies of the United States, or 
                        by producing performance of recovery 
                        audits by private sector sources by 
                        contract, subject to the availability 
                        of appropriations, or by any 
                        combination thereof.
                  (C) Recovery audit contracts.--With respect 
                to a recovery audit procured by an executive 
                agency by contract--
                          (i) subject to subparagraph (B)(iii), 
                        and except to the extent such actions 
                        are outside the authority of the 
                        executive agency under section 7103 of 
                        title 41, the head of the executive 
                        agency may authorize the contractor 
                        to--
                                  (I) notify entities, 
                                including individuals, of 
                                potential overpayments made to 
                                those entities;
                                  (II) respond to questions 
                                concerning potential 
                                overpayments; and
                                  (III) take other 
                                administrative actions with 
                                respect to an overpayment claim 
                                made or to be made by the 
                                executive agency; and
                          (ii) the contractor shall not have 
                        the authority to make a final 
                        determination relating to whether any 
                        overpayment occurred or whether to 
                        compromise, settle, or terminate an 
                        overpayment claim.
                  (D) Contract terms and conditions.--
                          (i) In general.--The executive agency 
                        shall include in each contract for 
                        procurement of performance of a 
                        recovery audit a requirement that the 
                        contractor shall--
                                  (I) provide to the executive 
                                agency periodic reports on 
                                conditions giving rise to 
                                overpayments identified by the 
                                contractor and any 
                                recommendations on how to 
                                mitigate those conditions;
                                  (II) notify the executive 
                                agency of any overpayments 
                                identified by the contractor 
                                pertaining to the executive 
                                agency or to any other 
                                executive agency that are 
                                beyond the scope of the 
                                contract; and
                                  (III) report to the executive 
                                agency credible evidence of 
                                fraud or vulnerabilities to 
                                fraud and conduct appropriate 
                                training of personnel of the 
                                contractor on identification of 
                                fraud.
                          (ii) Reports on action taken.--Each 
                        executive agency shall, on an annual 
                        basis, include in an annual financial 
                        statement of the executive agency a 
                        report on actions taken by the 
                        executive agency during the preceding 
                        fiscal year to address the 
                        recommendations described in clause 
                        (i)(I).
                  (E) Agency action following notification.--
                Each executive agency shall--
                          (i) take prompt and appropriate 
                        action in response to a report or 
                        notification by a contractor under 
                        subclause (I) or (II) of subparagraph 
                        (D)(i) to collect an overpayment; and
                          (ii) forward to other executive 
                        agencies any information that applies 
                        to that executive agency.
          (2) Disposition of amounts recovered.--
                  (A) In general.--Amounts collected by 
                executive agencies each fiscal year through 
                recovery audits shall be treated in accordance 
                with this paragraph.
                  (B) Distribution.--The head of an executive 
                agency shall determine the distribution of 
                collected amounts described in subparagraph 
                (A), less amounts needed to fulfill the 
                purposes of section 3562(a) of this title, in 
                accordance with subparagraphs (C), (D), and 
                (E).
                  (C) Use for financial management improvement 
                program.--Not more than 25 percent of the 
                amounts collected by an executive agency 
                through recovery audits--
                          (i) shall be available to the head of 
                        the executive agency to carry out the 
                        financial management improvement 
                        program of the executive agency under 
                        paragraph (3);
                          (ii) may be credited, if applicable, 
                        for the purpose described in clause (i) 
                        by the head of an executive agency to 
                        any executive agency appropriations and 
                        funds that are available for obligation 
                        at the time of collection; and
                          (iii) shall be used to supplement and 
                        not supplant any other amounts 
                        available for the purpose described in 
                        clause (i) and shall remain available 
                        until expended.
                  (D) Use for original purpose.--Not more than 
                25 percent of the amounts collected by an 
                executive agency through recovery audits--
                          (i) shall be credited to the 
                        appropriation or fund, if any, 
                        available for obligation at the time of 
                        collection for the same general 
                        purposes as the appropriation or fund 
                        from which the overpayment was made;
                          (ii) shall remain available for the 
                        same period and purposes as the 
                        appropriation or fund to which 
                        credited; and
                          (iii) if the appropriation from which 
                        an overpayment was made has expired--
                                  (I) in the case of recoveries 
                                of overpayments that are made 
                                from a trust or special fund 
                                account, shall revert to that 
                                account; and
                                  (II) in the case of other 
                                recoveries of overpayments--
                                          (aa) for amounts that 
                                        are recovered more than 
                                        5 fiscal years from the 
                                        last fiscal year in 
                                        which the funds were 
                                        available for 
                                        obligation, shall be 
                                        deposited in the 
                                        Treasury as 
                                        miscellaneous receipts; 
                                        and
                                          (bb) for other 
                                        amounts, shall be newly 
                                        available for the same 
                                        time period as the 
                                        funds were originally 
                                        available for 
                                        obligation.
                  (E) Use for inspector general activities.--
                Not more than 5 percent of the amounts 
                collected by an executive agency through 
                recovery audits--
                          (i) shall be available to the 
                        Inspector General of that executive 
                        agency for--
                                  (I) the Inspector General to 
                                carry out this Act; or
                                  (II) any other activities of 
                                the Inspector General relating 
                                to investigating improper 
                                payments or auditing internal 
                                controls associated with 
                                payments; and
                          (ii) shall remain available for the 
                        same period and purposes as the 
                        appropriation or fund to which 
                        credited.
                  (F) Remainder.--Amounts collected that are 
                not applied in accordance with subparagraph 
                (B), (C), (D), or (E) shall be deposited in the 
                Treasury as miscellaneous receipts, except that 
                in the case of recoveries of overpayments that 
                are made from trust or special fund accounts, 
                those amounts shall revert to those accounts.
                  (G) Discretionary amounts.--This paragraph 
                shall apply only to recoveries of overpayments 
                that are made from discretionary 
                appropriations, as defined in section 250(c)(7) 
                of the Balanced Budget and Emergency Deficit 
                Control Act of 1985 (2 U.S.C. 900(c)(7)), and 
                shall not apply to recoveries of overpayments 
                that are made from discretionary amounts that 
                were appropriated before the date of enactment 
                of the Improper Payments Elimination and 
                Recovery Act of 2010, as in effect on the day 
                before the date of enactment of this section.
                  (H) Application.--This paragraph shall not 
                apply to the recovery of an overpayment if the 
                appropriation from which the overpayment was 
                made has not expired.
          (3) Financial management improvement program.--
                  (A) Requirement.--The head of each executive 
                agency shall conduct a financial management 
                improvement program consistent with rules 
                prescribed by the Director of the Office of 
                Management and Budget.
                  (B) Program features.--In conducting a 
                program described in subparagraph (A), the head 
                of an executive agency--
                          (i) shall, as the first priority of 
                        the program, address problems that 
                        contribute directly to executive agency 
                        improper payments; and
                          (ii) may seek to reduce errors and 
                        waste in other executive agency 
                        programs and operations.
          (4) Privacy protection.--Any nongovernmental entity 
        that, in the course of recovery auditing or recovery 
        activity under this subsection, obtains information 
        that identifies an individual or with respect to which 
        there is a reasonable basis to believe that the 
        information can be used to identify an individual, may 
        not disclose the information for any purpose other than 
        the recovery auditing or recovery activity and 
        governmental oversight of the activity, unless 
        disclosure for that other purpose is authorized by the 
        individual to the executive agency that contracted for 
        the performance of the recovery auditing or recovery 
        activity.
          (5) Rule of construction.--Except as provided under 
        paragraph (4), nothing in this subsection shall be 
        construed as terminating or in any way limiting 
        authorities that are otherwise available to executive 
        agencies under existing provisions of law to recover 
        improper payments and use recovered amounts.

SEC. 3353. COMPLIANCE.

    (a) Annual Compliance Report by Inspectors General of 
Executive Agencies.--
          (1) In general.--Each fiscal year, the Inspector 
        General of each executive agency shall--
                  (A) determine whether the executive agency is 
                in compliance; and
                  (B) submit a report on the determination made 
                under subparagraph (A) to--
                          (i) the head of the executive agency;
                          (ii) the Committee on Homeland 
                        Security and Governmental Affairs of 
                        the Senate;
                          (iii) the Committee on Oversight and 
                        Governmental Reform of the House of 
                        Representatives; and
                          (iv) the Comptroller General of the 
                        United States.
          (2) Development or use of a central website.--The 
        Council of the Inspectors General on Integrity and 
        Efficiency (in this subsection referred to as the 
        `Council') shall develop a public central website, or 
        make use of a public central website in existence on 
        the date of enactment of this section, to contain 
        individual compliance determination reports issued by 
        Inspectors General under paragraph (1)(B) and such 
        additional information as determined by the Council.
          (3) OMB guidance.--No later than 180 days after the 
        date of enactment of this section, the Director of the 
        Office of Management and Budget, in consultation with 
        the Council and with consideration given to the 
        available resources and independence of individual 
        Offices of Inspectors General, shall develop and 
        promulgate guidance for the compliance determination 
        reports issued by the Inspectors General under 
        paragraph (1)(B), which shall require that--
                  (A) the reporting format used by the 
                Inspectors General is consistent;
                  (B) Inspectors General evaluate and take into 
                account the adequacy of executive agency risk 
                assessments, improper payment estimates 
                methodology, and executive agency action plans 
                to address the causes of improper payments;
                  (C) Inspectors General take into account 
                whether the executive agency has correctly 
                identified the causes of improper payments and 
                whether the actions of the executive agency to 
                address those causes are adequate and 
                effective;
                  (D) Inspectors General evaluate the adequacy 
                of executive agency action plans on how the 
                executive agency addresses the causes of 
                improper payments; and
                  (E) as part of the report, Inspectors General 
                include an evaluation of executive agency 
                efforts to prevent and reduce improper payments 
                and any recommendations for actions to further 
                improve that prevention and reduction.
          (4) CIGIE guidance.--Not later than 180 days after 
        the date of enactment of this section, the Council 
        shall, with consideration given to the available 
        resources and independence of individual Offices of 
        Inspectors General, develop and promulgate guidance 
        that specifies procedures for compliance determinations 
        made by the Inspectors General under paragraph (1)(A), 
        which shall describe procedures for Inspectors 
        General--
                  (A) to make the determinations consistent 
                regarding compliance; and
                  (B) to evaluate--
                          (i) for compliance with the 
                        requirement described in section 
                        3351(2)(B), the risk assessment 
                        methodology of the executive agency, 
                        including whether the audits, 
                        examinations, and legal actions of the 
                        Inspector General indicate a higher 
                        risk of improper payments or actual 
                        improper payments that were not 
                        included in the risk assessments of the 
                        executive agency conducted under 
                        section 3352(a);
                          (ii) for compliance with the 
                        requirement described in section 
                        3351(2)(C), the accuracy of the rate 
                        estimates and whether the sampling and 
                        estimation plan used is appropriate 
                        given program characteristics;
                          (iii) for compliance with the 
                        requirement described in section 
                        3351(2)(D), the corrective action plans 
                        and whether the plans are adequate and 
                        focused on the true causes of improper 
                        payments, including whether the 
                        corrective action plans are--
                                  (I) reducing improper 
                                payments;
                                  (II) effectively implemented; 
                                and
                                  (III) prioritized within the 
                                executive agency;
                          (iv) the adequacy of executive agency 
                        action plans to address the causes of 
                        improper payments;
                          (v) executive agency efforts to 
                        prevent and reduce improper payments, 
                        and any recommendations for actions to 
                        further improve; and
                          (vi) whether an executive agency has 
                        published an annual financial statement 
                        in accordance with the requirement 
                        described in section 3351(2)(A).
    (b) Remediation.--
          (1) Noncompliance.--
                  (A) In general.--If an executive agency is 
                determined by the Inspector General of that 
                executive agency not to be in compliance under 
                subsection (a) in a fiscal year with respect to 
                a program or activity, the head of the 
                executive agency shall submit to the 
                appropriate authorizing and appropriations 
                committees of Congress a plan describing the 
                actions that the executive agency will take to 
                come into compliance.
                  (B) Plan.--The plan described in subparagraph 
                (A) shall include--
                          (i) measurable milestones to be 
                        accomplished in order to achieve 
                        compliance for each program or 
                        activity;
                          (ii) the designation of a senior 
                        executive agency official who shall be 
                        accountable for the progress of the 
                        executive agency in coming into 
                        compliance for each program or 
                        activity; and
                          (iii) the establishment of an 
                        accountability mechanism, such as a 
                        performance agreement, with appropriate 
                        incentives and consequences tied to the 
                        success of the official designated 
                        under clause (ii) in leading the 
                        efforts of the executive agency to come 
                        into compliance for each program or 
                        activity.
          (2) Noncompliance for 2 fiscal years.--
                  (A) In general.--If an executive agency is 
                determined by the Inspector General of that 
                executive agency not to be in compliance under 
                subsection (a) for 2 consecutive fiscal years 
                for the same program or activity, the executive 
                agency shall propose to the Director of the 
                Office of Management and Budget additional 
                program integrity proposals that would help the 
                executive agency come into compliance.
                  (B) Additional funding--
                          (i) In general.--If the Director of 
                        the Office of Management and Budget 
                        determines that additional funding 
                        would help the executive agency come 
                        into compliance, the head of the 
                        executive agency shall obligate 
                        additional funding, in an amount 
                        determined by the Director, to 
                        intensified compliance efforts.
                          (ii) Reprogramming or transfer 
                        authority.--In providing additional 
                        funding under clause (i)--
                                  (I) the head of an executive 
                                agency shall use any 
                                reprogramming or transfer 
                                authority available to the 
                                executive agency; and
                                  (II) if after exercising the 
                                reprogramming or transfer 
                                authority described in 
                                subclause (I), additional 
                                funding is necessary to 
                                obligate the full level of 
                                funding determined by the 
                                Director of the Office of 
                                Management and Budget under 
                                clause (i), the executive 
                                agency shall submit a request 
                                to Congress for additional 
                                reprogramming or transfer 
                                authority.
          (3) Reauthorization and statutory proposals.--If an 
        executive agency is determined by the Inspector General 
        of that executive agency not to be in compliance under 
        subsection (a) for 3 consecutive fiscal years for the 
        same program or activity, the head of the executive 
        agency shall, not later than 30 days after the date of 
        that determination, submit to the appropriate 
        authorizing and appropriations committees of Congress 
        and the Comptroller General of the United States--
                  (A)(i) reauthorization proposals for each 
                program or activity that has not been in 
                compliance for 3 or more consecutive fiscal 
                years; and
                  (ii) proposed statutory changes necessary to 
                bring the program or activity into compliance; 
                or
                  (B) if the head of the executive agency 
                determines that clauses (i) and (ii) of 
                subparagraph (A) will not bring the program or 
                activity into compliance, a description of the 
                actions that the executive agency is 
                undertaking to bring the program or activity 
                into compliance and a timeline of when the 
                compliance will be achieved.
          (4) Plan and timeline for compliance.--If an 
        executive agency is determined by the Inspector General 
        of that executive agency not to be in compliance under 
        subsection (a) for 4 or more consecutive fiscal years 
        for the same program or activity, the head of the 
        executive agency shall, not later than 30 days after 
        such determination, submit to the appropriate 
        authorizing and appropriations committees of Congress a 
        report that includes--
                  (A) the activities taken to comply with the 
                requirements for 1, 2, 3, 4, or more years of 
                noncompliance;
                  (B) a description of any requirements that 
                were fulfilled for 1, 2, or 3 consecutive years 
                of noncompliance that are still relevant and 
                being pursued as a means to bring the program 
                or activity into compliance and prevent and 
                reduce improper payments;
                  (C) a description of any new corrective 
                actions; and
                  (D) a timeline for when the program or 
                activity will achieve compliance based on the 
                actions described within the report.
          (5) Annual report.--Each executive agency shall 
        submit to the appropriate authorizing and 
        appropriations committees of Congress and the 
        Comptroller General of the United States--
                  (A) a list of each program or activity that 
                was determined to not be in compliance under 
                paragraph (1), (2), (3), or (4); and
                  (B) actions that are planned to bring the 
                program or activity into compliance.
    (c) Compliance Enforcement Pilot Programs.--The Director of 
the Office of Management and Budget may establish 1 or more 
pilot programs that shall test potential accountability 
mechanisms with appropriate incentives and consequences tied to 
success in ensuring compliance with this section and 
eliminating improper payments.
    (d) Improved Estimates Guidance.--The guidance required to 
be provided under section 3(b) of the Improper Payments 
Elimination and Recovery Improvement Act of 2012, as in effect 
on the day before the date of enactment of this section--
          (1) shall continue to be in effect on and after the 
        date of enactment of this section; and
          (2) may be modified as determined appropriate by the 
        Director of the Office of Management and Budget.

SEC. 3354. DO NOT PAY INITIATIVE.

    (a) Prepayment and Preaward Procedures.--
          (1) In general.--Each executive agency shall review 
        prepayment and preaward procedures and ensure that a 
        thorough review of available databases with relevant 
        information on eligibility occurs to determine program 
        or award eligibility and prevent improper payments 
        before the release of any Federal funds.
          (2) Databases.--At a minimum and before issuing any 
        payment and award, each executive agency shall review 
        as appropriate the following databases to verify 
        eligibility of the payment and award:
                  (A) The death records maintained by the 
                Commissioner of Social Security.
                  (B) The System for Award Management Exclusion 
                Records, formerly known as the Excluded Parties 
                List System, of the General Services 
                Administration.
                  (C) The Debt Check Database of the Department 
                of the Treasury.
                  (D) The Credit Alert System or Credit Alert 
                Interactive Voice Response System of the 
                Department of Housing and Urban Development.
                  (E) The List of Excluded Individuals/Entities 
                of the Office of Inspector General of the 
                Department of Health and Human Services.
                  (F) Information regarding incarcerated 
                individuals maintained by the Commissioner of 
                Social Security under sections 202(x) and 
                1611(e) of the Social Security Act (42 U.S.C. 
                402(x), 1382(e)).
    (b) Do Not Pay Initiative.--
          (1) In general.--There is the Do Not Pay Initiative, 
        which shall include--
                  (A) use of the databases described in 
                subsection (a)(2); and
                  (B) use of other databases designated by the 
                Director of the Office of Management and 
                Budget, or the designee of the Director, in 
                consultation with executive agencies and in 
                accordance with paragraph (2).
          (2) Other databases.--In making designations of other 
        databases under paragraph (1)(B), the Director of the 
        Office of Management and Budget, or the head of any 
        executive agency designated by the Director, shall--
                  (A) consider any database that substantially 
                assists in preventing improper payments; and
                  (B) provide public notice and an opportunity 
                for comment before designating a database under 
                paragraph (1)(B).
          (3) Access and review.--
                  (A) In general.--For purposes of identifying 
                and preventing improper payments, each 
                executive agency shall have access to, and use 
                of, the Do Not Pay Initiative to verify payment 
                or award eligibility in accordance with 
                subsection (a).
                  (B) Matching programs.--
                          (i) In general.--The head of the 
                        agency operating the Working System 
                        may, in consultation with the Office of 
                        Management and Budget, waive the 
                        requirements of section 552a(o) of 
                        title 5 in any case or class of cases 
                        for computer matching activities 
                        conducted under this section.
                          (ii) Guidance.--The Director of the 
                        Office of Management and Budget may 
                        issue guidance that establishes 
                        requirements governing waivers under 
                        clause (i).
                  (C) Other entities.--Each State and any 
                contractor, subcontractor, or agent of a State, 
                including a State auditor or State program 
                responsible for reducing improper payments of a 
                federally funded State-administered program, 
                and the judicial and legislative branches of 
                the United States, as defined in paragraphs (2) 
                and (3), respectively, of section 202(e) of 
                title 18, shall have access to, and use of, the 
                Do Not Pay Initiative for the purpose of 
                verifying payment or award eligibility for 
                payments.
                  (D) Consistency with privacy act of 1974.--To 
                ensure consistency with the principles of 
                section 552a of title 5 (commonly known as the 
                `Privacy Act of 1974'), the Director of the 
                Office of Management and Budget may issue 
                guidance that establishes privacy and other 
                requirements that shall be incorporated into Do 
                Not Pay Initiative access agreements with 
                States, including any contractor, 
                subcontractor, or agent of a State, and the 
                judicial and legislative branches of the United 
                States, as defined in paragraphs (2) and (3), 
                respectively, of section 202(e) of title 18.
          (4) Payment otherwise required.--When using the Do 
        Not Pay Initiative, an executive agency shall recognize 
        that there may be circumstances under which the law 
        requires a payment or award to be made to a recipient, 
        regardless of whether that recipient is identified as 
        potentially ineligible under the Do Not Pay Initiative.
          (5) Annual report.--The Director of the Office of 
        Management and Budget shall submit to Congress an 
        annual report, which may be included as part of another 
        report submitted to Congress by the Director, regarding 
        the operation of the Do Not Pay Initiative, which 
        shall--
                  (A) include an evaluation of whether the Do 
                Not Pay Initiative has reduced improper 
                payments or improper awards; and
                  (B) provide the frequency of corrections or 
                identification of incorrect information.
    (c) Initial Working System.--The working system required to 
be established under section 5(d) of the Improper Payments 
Elimination and Recovery Improvement Act of 2012, as in effect 
on the day before the date of enactment of this section--
          (1) shall continue to be in effect on and after the 
        date of enactment of this section; and
          (2) shall require each executive agency to review all 
        payments and awards for all programs and activities of 
        that executive agency through the working system.
    (d) Facilitating Data Access by Federal Agencies and 
Offices of Inspectors General for Purposes of Program 
Integrity.--
          (1) Computer matching by executive agencies for 
        purposes of investigation and prevention of improper 
        payments and fraud.--
                  (A) In general.--Except as provided in this 
                paragraph, in accordance with section 552a of 
                title 5 (commonly known as the `Privacy Act of 
                1974'), the head of each executive agency may 
                enter into computer matching agreements with 
                other heads of executive agencies that allow 
                ongoing data matching, which shall include 
                automated data matching, in order to assist in 
                the detection and prevention of improper 
                payments.
                  (B) Review.--Not later than 60 days after the 
                date on which a proposal for an agreement under 
                subparagraph (A) has been presented to a Data 
                Integrity Board established under section 
                552a(u) of title 5 for consideration, the Data 
                Integrity Board shall respond to the proposal.
                  (C) Termination date.--An agreement described 
                in subparagraph (A)--
                          (i) shall have a termination date of 
                        less than 3 years; and
                          (ii) during the 3-month period ending 
                        on the date on which the agreement is 
                        scheduled to terminate, may be renewed 
                        by the executive agencies entering the 
                        agreement for not more than 3 years.
                  (D) Multiple agencies.--For purposes of this 
                paragraph, section 552a(o)(1) of title 5 shall 
                be applied by substituting `between the source 
                agency and the recipient agency or non-Federal 
                agency or an agreement governing multiple 
                agencies' for `between the source agency and 
                the recipient agency or non-Federal agency' in 
                the matter preceding subparagraph (A).
                  (E) Cost-benefit analysis.--A justification 
                under section 552a(o)(1)(B) of title 5 relating 
                to an agreement under subparagraph (A) is not 
                required to contain a specific estimate of any 
                savings under the computer matching agreement.
          (2) Guidance and procedures by the office of 
        management and budget.--The guidance, rules, and 
        procedures required to be issued, clarified, and 
        established under paragraphs (3) and (4) of section 
        5(e) of the Improper Payments Elimination and Recovery 
        Improvement Act of 2012, as in effect on the day before 
        the date of enactment of this section--
                  (A) shall continue to be in effect on and 
                after the date of enactment of this section; 
                and
                  (B) may be modified as determined appropriate 
                by the Director of the Office of Management and 
                Budget.
          (3) Compliance.--The head of each executive agency, 
        in consultation with the Inspector General of the 
        executive agency, shall ensure that any information 
        provided to an individual or entity under this 
        subsection is provided in accordance with protocols 
        established under this subsection.
          (4) Rule of construction.--Nothing in this subsection 
        shall be construed--
                  (A) to affect the rights of an individual 
                under section 552a(p) of title 5; or
                  (B) to impede the exercise of an exemption 
                provided to Inspectors General or by an 
                executive agency in coordination with an 
                Inspector General under section 6(j) of the 
                Inspector General Act of 1978 (5 U.S.C. App.).
    (e) Plan To Curb Federal Improper Payments to Deceased 
Individuals by Improving the Quality and Use by Federal 
Agencies of the Social Security Administration Death Master 
File and Other Death Data.--
          (1) Establishment.--In conjunction with the 
        Commissioner of Social Security and in consultation 
        with relevant stakeholders that have an interest in or 
        responsibility for providing the data, and each State, 
        the Director of the Office of Management and Budget 
        shall conduct a study and update the plan required to 
        be established under section 5(g) of the Improper 
        Payments Elimination and Recovery Improvement Act of 
        2012, as in effect on the day before the date of 
        enactment of this section, for improving the quality, 
        accuracy, and timeliness of death data maintained by 
        the Social Security Administration, including death 
        information reported to the Commissioner under section 
        205(r) of the Social Security Act (42 U.S.C. 405(r)).
          (2) Additional actions under plan.--The plan 
        described in this subsection shall include recommended 
        actions by executive agencies to--
                  (A) increase the quality and frequency of 
                access to the Death Master File and other death 
                data;
                  (B) achieve a goal of at least daily access 
                as appropriate;
                  (C) provide for all States and other data 
                providers to use improved and electronic means 
                for providing data;
                  (D) identify improved methods by executive 
                agencies for determining ineligible payments 
                due to the death of a recipient through 
                proactive verification means; and
                  (E) address improper payments made by 
                executive agencies to deceased individuals as 
                part of Federal retirement programs.
          (3) Report.--Not later than 120 days after the date 
        of enactment of this section, the Director of the 
        Office of Management and Budget shall submit a report 
        to Congress on the plan described in this subsection, 
        including recommended legislation.

SEC. 3355. IMPROVING RECOVERY OF IMPROPER PAYMENTS.

    The Director of the Office of Management and Budget shall 
determine--
          (1) current and historical rates and amounts of 
        recovery of improper payments, or, in cases in which 
        improper payments are identified solely on the basis of 
        a sample, recovery rates and amounts estimated on the 
        basis of the applicable sample, including a list of 
        executive agency recovery audit contract programs and 
        specific information of amounts and payments recovered 
        by recovery audit contractors; and
          (2) targets for recovering improper payments, 
        including specific information on amounts and payments 
        recovered by recovery audit contractors.

SEC. 3356. IMPROVING THE USE OF DATA BY EXECUTIVE AGENCIES FOR CURBING 
                    IMPROPER PAYMENTS.

    (a) Prompt Reporting of Death Information by the Department 
of State and the Department of Defense.--The procedure required 
to be established under section 7(a) of the Improper Payments 
Elimination and Recovery Improvement Act of 2012, as in effect 
on the day before the date of enactment of this section--
          (1) shall continue to be in effect on and after the 
        date of enactment of this section; and
          (2) may be modified as determined appropriate by the 
        Director of the Office of Management and Budget.
    (b) Prompt Reporting of Death Information by the Department 
of Veterans Affairs and the Office of Personnel Management.--
Not later than 1 year after the date of enactment of this 
section, the Secretary of Veterans Affairs and the Director of 
the Office of Personnel Management shall establish a procedure 
under which the Secretary and the Director--
          (1) shall promptly and on a regular basis submit 
        information relating to the deaths of individuals, 
        including stopped payments data as applicable, to each 
        executive agency for which the Director of the Office 
        of Management and Budget determines receiving and using 
        such information would be relevant and necessary; and
          (2) to facilitate the centralized access of death 
        data for the use of reducing improper payments, may 
        identify additional Federal sources of death data and 
        direct the data owner to provide that data to 1 or more 
        executive agencies for that purpose.
    (c) Guidance to Executive Agencies Regarding Data Access 
and Use for Improper Payments Purposes.--The guidance required 
to be issued under section 7(b) of the Improper Payments 
Elimination and Recovery Improvement Act of 2012, as in effect 
on the day before the date of enactment of this section--
          (1) shall continue to be in effect on and after the 
        date of enactment of this section; and
          (2) may be modified as determined appropriate by the 
        Director of the Office of Management and Budget.

SEC. 3357. FINANCIAL AND ADMINISTRATIVE CONTROLS RELATING TO FRAUD AND 
                    IMPROPER PAYMENTS.

    (a) Definition.--In this section, the term `agency' has the 
meaning given the term in section 551 of title 5.
    (b) Guidelines.--The guidelines required to be established 
under section 3(a) of the Fraud Reduction and Data Analytics 
Act of 2015, as in effect on the day before the date of 
enactment of this section--
          (1) shall continue to be in effect on and after the 
        date of enactment of this section; and
          (2) may be periodically modified by the Director of 
        the Office of Management and Budget, in consultation 
        with the Comptroller General of the United States, as 
        the Director and Comptroller General may determine 
        necessary.
    (c) Requirements for Controls.--The guidelines described in 
subsection (b) shall include--
          (1) conducting an evaluation of fraud risks and using 
        a risk-based approach to design and implement financial 
        and administrative control activities to mitigate 
        identified fraud risks;
          (2) collecting and analyzing data from reporting 
        mechanisms on detected fraud to monitor fraud trends 
        and using that data and information to continuously 
        improve fraud prevention controls; and
          (3) using the results of monitoring, evaluation, 
        audits, and investigations to improve fraud prevention, 
        detection, and response.
    (d) Report.--For each of fiscal years 2018 and 2019, each 
agency shall submit to Congress, as part of the annual 
financial report of the agency, a report of the agency on--
          (1) implementing--
                  (A) the financial and administrative controls 
                described in subsection (b);
                  (B) the fraud risk principle in the Standards 
                for Internal Control in the Federal Government 
                published by the Government Accountability 
                Office (commonly known as the `Green Book'); 
                and
                  (C) Office of Management and Budget Circular 
                A-123, or any successor thereto, with respect 
                to the leading practices for managing fraud 
                risk;
          (2) identifying risks and vulnerabilities to fraud, 
        including with respect to payroll, beneficiary 
        payments, grants, large contracts, and purchase and 
        travel cards; and
          (3) establishing strategies, procedures, and other 
        steps to curb fraud.

SEC. 3358. INTERAGENCY WORKING GROUP FOR GOVERNMENTWIDE PAYMENT 
                    INTEGRITY IMPROVEMENT.

    (a) Working Group.--
          (1) Establishment.--Not later than 90 days after the 
        date of enactment of this section, there is established 
        an interagency working group on payment integrity--
                  (A) to improve--
                          (i) State-administered Federal 
                        programs to determine eligibility 
                        processes and data sharing practices;
                          (ii) the guidelines described in 
                        section 3357(b) and other best 
                        practices and techniques for detecting, 
                        preventing, and responding to improper 
                        payments, including improper payments 
                        that are the result of fraud; and
                          (iii) the sharing and development of 
                        data analytics techniques to help 
                        prevent and identify potential improper 
                        payments, including those that are the 
                        result of fraud; and
                  (B) to identify any additional activities 
                that will improve payment integrity of Federal 
                programs.
          (2) Composition.--The interagency working group 
        established under paragraph (1) shall be composed of--
                  (A) the Director of the Office of Management 
                and Budget;
                  (B) 1 representative from each of the 
                agencies described in paragraphs (1) and (2) of 
                section 901(b) of this title; and
                  (C) any other representatives of other 
                executive agencies determined appropriate by 
                the Director of the Office of Management and 
                Budget, which may include the Chief Information 
                Officer, the Chief Procurement Officer, the 
                Chief Risk Officer, or the Chief Operating 
                Officer of an executive agency.
    (b) Consultation.--The working group established under 
subsection (a)(1) may consult with Offices of Inspectors 
General and Federal and non-Federal experts on fraud risk 
assessments, administrative controls over payment integrity, 
financial controls, and other relevant matters.
    (c) Meetings.--The working group established under 
subsection (a)(1) shall hold not fewer than 4 meetings per 
year.
    (d) Report.--Not later than 240 days after the date of 
enactment of this section, the working group established under 
subsection (a)(1) shall submit to Congress a report that 
includes--
          (1) a plan containing tangible solutions to prevent 
        and reduce improper payments; and
          (2) a plan for State agencies to work with Federal 
        agencies to regularly review lists of beneficiaries of 
        State-managed Federal programs for duplicate enrollment 
        between States, including how the Do Not Pay Business 
        Center and the data analytics initiative of the 
        Department of the Treasury could aid in the detection 
        of duplicate enrollment.

           *       *       *       *       *       *       *


CHAPTER 35--ACCOUNTING AND COLLECTION

           *       *       *       *       *       *       *



Subchapter VI--Recovery Audits

           *       *       *       *       *       *       *



SEC. 3562. DISPOSITION OF RECOVERED FUNDS.

    (a) Availability of Funds for Recovery Audits and 
Activities Program.--Funds collected under a program carried 
out by an executive agency under [section 3561] section 3352(i) 
of this title shall be available to the executive [agency for 
the following purposes:
          [(1) To reimburse] agency to reimburse the actual 
        expenses incurred by the executive agency in the 
        administration of the program.
          (2) To pay contractors for services under the program 
        in accordance with the guidance issued under section 
        3561(c)(5) of this title.

           *       *       *       *       *       *       *


TITLE 42--THE PUBLIC HEALTH SERVICE

           *       *       *       *       *       *       *


CHAPTER 7--SOCIAL SECURITY

           *       *       *       *       *       *       *



        Subchapter XX--State Children's Health Insurance Program


SEC. 1397EE. PAYMENTS TO STATES.

    (a) * * *
    (b) * * *
    (c) * * *
          (1) * * *
          (2) * * *
                  (A) * * *
                  (B) * * *
                  (C) * * *
                          (i) * * *

           *       *       *       *       *       *       *

                          (iv) Payment error rate measurement 
                        (perm) expenditures.--Expenditures 
                        related to the administration of the 
                        payment error rate measurement (PERM) 
                        requirements applicable to the State 
                        child health plan in accordance with 
                        [the Improper Payments Information Act 
                        of 2002] subchapter IV of chapter 33 of 
                        title 31, United States Code and parts 
                        431 and 457 of title 42, Code of 
                        Federal Regulations (or any related or 
                        successor guidance or regulations).

           *       *       *       *       *       *       *

          (11) Enhanced payments.--Notwithstanding subsection 
        (b), the enhanced FMAP with respect to payments under 
        subsection (a) for expenditures related to the 
        administration of the payment error rate measurement 
        (PERM) requirements applicable to the State child 
        health plan in accordance with the [Improper Payments 
        Information Act of 2002] subchapter IV of chapter 33 of 
        title 31, United States Code and parts 431 and 457 of 
        title 42, Code of Federal Regulations (or any related 
        or successor guidance or regulations) shall in no event 
        be less than 90 percent.

           *       *       *       *       *       *       *


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