OMB: $687M recovered in improper agency payments

By Jamie Blanco
Digital News Writer

The White House released promising numbers Tuesday on its government-wide efforts to reduce and recover improper payments. Agencies also now have new guidance to help maintain the trend.

The Office of Management and Budget has been working to track and recoup the money paid by agencies in the wrong amount or to the wrong vendors and contractors. And the results are in for Fiscal Year 2010

According to OMB, $687 million was recovered across all agencies this year. That total is 300 percent or three times what was recovered in FY2009.


The latest numbers seemingly put OMB on pace to reach the White House’s goal of reducing improper payments by $2 billion by the end of 2012 — a bar set as part of its Accountable Government Initiative.

“We’re right on target. In fact, the way we look at the numbers, we’re ahead of schedule,” said OMB Comptroller Danny Werfel during a teleconference Tuesday.

“There’s two different areas that we had established targets for, federal contracts and Medicare. And on Medicare we’re on pace with where we want to be and federal contracts, we’re ahead to hit the $2 billion,” Werfel said.

The error rate for improper payments also fell from 5.65 percent in 2009 to 5.49 percent in 2010, saving tax payers $3.8 billion.

“Ten programs make up most of the improper payment dollars,” Werfel said. “This year 8 of these 10 large programs all saw error rate reductions.” In particular Medicare fee-for-service, Medicare Part C, and Medicaid all saw their rates decline.

Rep. Darrell Issa (R-CA), ranking member of the House Oversight and Government Reform Committee, said in a statement Monday that it was unthinkable to accept this “institutionalized waste, fraud and abuse.”

“The first place we should look to make progress on higher costs, increased debt and a stagnant economy is look inward at how taxpayer dollars are being spent and doing more to ensure that tens of billions of dollars are no longer erroneously paid out,” Issa said.

OMB also announced the creation of a proverbial “do not pay” list.

It’s an entirely new platform called and comes as the result of a directive from President Obama in June.

“What this platform does is it brings together for the first time three of the major databases,” Werfel said. “It brings together the ‘excluded party list’ for those entities that have been excluded or debarred, the social security death master file, and the Bureau of Prison’s database on incarcerated individuals.”

“Agencies will be able to go onto this site and search across all three databases simultaneously to determine whether their entity or individual that they are about to make an award or payment to is listed on one of these databases,” Werfel said. will not be open to the public but agencies can apply for log-ins.

Werfel said OMB has teamed up with Veteran Affairs, the Recovery Board and the Treasury Department to continue investing and developing these new tools and technologies.

The allegiance with the VA could be particularly helpful in strengthening the tool, Werfel said.

“We chose VA because they have a good cross section of payment types. They pay out money in different ways. They make a lot of contract payment. They make a lot of benefits payments as we learn from them and with them how a do-not-pay technology can be most useful in terms of helping with their payments. That type of learning, we believe, will have broader applicability across government.”

Meanwhile OMB has new guidance for agencies on how to continue fighting improper payments and abuse to stay compliant with the new Improper Payments Elimination and Recovery Act signed earlier this year.

The bill requires a dramatic expansion of agency payment recovery efforts.

“Under the old version of the legislation, payment recapture audits were only required for two cases, for federal agencies that did $500 million or more, and Medicare, and what this bill did was expand it to virtually all activities” including grants and loans.

Agencies will have to submit plans to OMB for how they are going to expand their improper payment reduction efforts and what steps they’re going to take their payment recapture audits to new activities.