Payment Integrity: Selected Agencies Should Improve Efforts to Evaluate Effectiveness of Corrective Actions to Reduce Improper Payments

Improper payments, estimated at almost $175 billion for fiscal year 2019, are a significant problem in the federal government. IPIA and OMB guidance directs agencies to analyze the root causes of improper payments and develop corrective actions to reduce improper payments. This report examines (1) actions that agencies took to identify root causes of improper payments for selected programs, (2) the extent to which their corrective action plans correspond to identified root causes, and (3) the extent to which they monitored progress and evaluated the effectiveness of corrective actions.

GAO analyzed corrective action plans reported in fiscal year 2018 for the following eight programs: Department of Education's Direct Loan and Pell Grant; HHS's Children's Health Insurance Program; SSA's Old Age, Survivors, and Disability Insurance and Supplemental Security Income; Treasury's EITC; USDA's SNAP; and VA's Prosthetic and Sensory Aids Service. GAO selected these programs based, in part, on those programs with at least $1 billion in fiscal year 2018 improper payment estimates.

Five out of six agencies used their improper payment estimation results to identify the root causes for the eight programs GAO reviewed. However, the Department of the Treasury (Treasury) used 2006 through 2008 taxpayer data to identify root causes of fiscal year 2018 Earned Income Tax Credit (EITC) improper payments. Without timely data on the true root causes of EITC improper payments, Treasury will lack quality information needed to develop appropriate corrective actions to reduce them.

In addition, only one agency we reviewed—the Department of Veterans Affairs (VA)—adhered to relevant Improper Payments Information Act of 2002, as amended (IPIA), requirements and Office of Management and Budget (OMB) guidance. The Department of Agriculture (USDA) and Treasury did not develop agency corrective action plans corresponding to the identified root causes of improper payments for the Supplemental Nutrition Assistance Program (SNAP) and EITC, respectively. In addition, the remaining three agencies did not have processes in place to either establish planned completion dates, monitor progress, or measure the effectiveness of their corrective actions in reducing improper payments.

Unless agencies develop corrective action plans that correspond to root causes of improper payments and implement processes to monitor progress and measure their effectiveness, their ability to ensure that their efforts will reduce improper payments will be limited

GAO is making seven recommendations: one each to Education, HHS, and SSA and two each to USDA and Treasury to improve their processes for addressing root causes of improper payments and measure their effectiveness. In their responses, SSA agreed, USDA generally agreed, Education and Treasury neither agreed nor disagreed, and HHS disagreed with GAO's respective recommendation(s). GAO clarified four recommendations and continues to believe all the recommendations are valid.

Improper payments—payments that should not have been made or were  made in incorrect amounts under statutory, contractual, administrative, or  other legally applicable requirements—are a significant problem in the  federal government. For fiscal year 2019, federal agency improper  payment estimates totaled about $175 billion, a $24 billion increase from  the prior year. Further, as we have reported, although agencies report  improper payment estimates annually, the federal government is unable  to determine the full extent to which improper payments occur or  reasonably ensure that actions are taken to reduce them. Additionally,  we have previously noted that some inspectors general (IG) have also  reported issues related to agencies’ improper payment estimates,  including the use of processes that do not produce reliable estimates for  agency reports.

The Improper Payments Information Act of 2002, as amended (IPIA) by  the Improper Payments Elimination and Recovery Act of 2010 (IPERA) and the Improper Payments Elimination and Recovery Improvement Act  of 2012 (IPERIA), herein collectively referred to as IPIA, requires  agencies, among other things, to report on the causes of improper  payments identified in their programs for which they reported improper  payment estimates, actions taken to correct those causes, and the  planned or actual completion dates of those actions. Related OMB  guidance further directs agencies to report on the results of those  actions. IPERA requires IGs to conduct an annual review to determine  whether their agencies have published improper payment estimates for all  programs susceptible to significant improper payments and published  programmatic corrective action plans in materials accompanying their  annual financial statements. In March 2020, Congress and the President  enacted the Payment Integrity Information Act of 2019 (PIIA), which  repealed IPIA, IPERA, and IPERIA and enacted substantially similar  provisions to replace them. Under PIIA, the core structure of executive  agency assessment, estimation, analysis (such as corrective actions),  and reporting of improper payments remains consistent with the statutory  framework in effect during the period of our audit.

We performed our work under the authority of the Comptroller General to  conduct evaluations on his own initiative and to assist Congress with its  oversight responsibilities. This report examines (1) actions agencies  have taken to identify root causes of improper payments for selected  programs, (2) the extent to which their corrective action plans correspond  to identified root causes, and (3) the extent to which agencies monitored  the progress and evaluated the effectiveness of implementing such  corrective action plans and communicated this information to appropriate  stakeholders within the agencies.

To address our objectives, we analyzed improper payment root cause  analysis and corrective action plan requirements under IPIA and related  Office of Management and Budget (OMB) M-18-20 and Circular No. A- 136. Based on this analysis, we identified key criteria that agencies  should use when identifying root causes of improper payments and  developing and monitoring related corrective action plans. Additionally,  we reviewed relevant federal internal control standards to determine the  relevant processes and procedures needed to help ensure that agencies  properly identify root causes of improper payments, develop  corresponding corrective action plans, and communicate relevant  information to appropriate stakeholders within the agencies.

We selected a nongeneralizable sample of eight programs among six  Chief Financial Officers Act of 1990 (CFO Act) agencies for our review.  Specifically, we focused on programs that reported improper payment  estimates greater than $1 billion for fiscal year 2018, resulting in 16  programs from seven agencies to consider for our review. We also  consulted with other GAO mission teams and relevant agencies’ offices of  inspector general and removed from consideration programs that had any  recent or ongoing work related to corrective action plans for improper  payments to avoid duplication of audit efforts. Based on this process, we  selected eight programs for review. Table 1 summarizes the selected  programs and their fiscal year 2018 and 2019 improper payment  estimates.

We interviewed officials within the selected agencies to determine their  processes for identifying root causes of improper payments, developing  corrective action plans in response to those root causes, monitoring the  progress and effectiveness of the corrective actions, and communicating  relevant corrective action plan information to agency officials. We also  reviewed agencies’ documented policies and procedures for these  processes.

We obtained documentation and supporting analyses on the corrective  action plans developed for root causes that agencies reported in their  fiscal year 2018 agency financial reports (AFR). We analyzed the  supporting documentation against relevant IPIA requirements, OMB  guidance, and federal internal control standards to determine how the  agencies identified root causes of improper payments and the extent to  which they (1) developed corrective actions that corresponded to the  identified root causes, (2) monitored the progress and effectiveness of  their corrective actions, and (3) communicated relevant information to the  appropriate stakeholders within the agency in accordance with such  requirements and guidance. For any agencies that did not adhere to the  relevant requirements or guidance, or did not provide a reasonable basis  for determining the root cause of improper payments, we inquired with  agency officials to determine the reasons they did not.

We conducted this performance audit from March 2019 to April 2020 in  accordance with generally accepted government auditing standards.  Those standards require that we plan and perform the audit to obtain  sufficient, appropriate evidence to provide a reasonable basis for our  findings and conclusions based on our audit objectives. We believe that  the evidence obtained provides a reasonable basis for our findings and  conclusions based on our audit objectives.

Background Key Requirements and Guidance on Agency Analysis of Improper Payments and Corrective Actions to Remediate Them

IPIA requires executive branch agencies to take various steps regarding  improper payments in accordance with guidance issued by OMB,  including the following:  1.  reviewing all programs and activities and identifying those that may be  susceptible to significant improper payments;  2.  developing improper payment estimates for those programs and  activities that agency risk assessments, OMB, or statutes identify as  being susceptible to significant improper payments;  3.  analyzing the root causes of improper payments and developing  corrective actions to reduce them; and  4.  reporting on the results of addressing the foregoing requirements.

Figure 1 illustrates these steps, as well as the major components of  analyzing root causes of improper payments and developing corrective  action plans to remediate them.

IPIA requires agencies with programs susceptible to significant improper  payments to report a description of the causes of the improper payments  identified, actions that the agency has planned or taken to correct those  causes, and the planned or actual completion dates of those actions. It  also requires agencies to report program-specific improper payment  reduction targets that OMB has approved.

OMB M-18-20 provides guidance to agencies for implementing IPIA  requirements, including their responsibilities for preventing and reducing  improper payments. The guidance directs agencies that have developed  estimates for improper payments to categorize them by root causes,  including the percentage of the total estimate for each category.  According to the guidance, this level of specificity helps lead to more  effective corrective actions and more focused prevention strategies. Table  2 summarizes OMB’s root cause categories.

OMB M-18-20 directs agencies with programs deemed susceptible to  significant improper payments to implement a corrective action plan that  responds to their root causes to prevent and reduce them. As such,  OMB directs that an agency must understand the true root cause of its  improper payments in order to develop targeted, effective corrective  actions, which are proportional to the severity of the associated amount  and rate of the root cause.

OMB M-18-20 also directs agencies to annually measure the  effectiveness and progress of individual corrective actions by assessing  results, such as performance and outcomes. In performing such  measurements, OMB states that agencies should determine if any  existing corrective actions can be intensified or expanded to further  reduce improper payments and to identify annual benchmarks for  corrective actions that agencies implement over multiple years. Agencies  may use these benchmarks to demonstrate progress in implementing the  actions or their initial effect on preventing and reducing improper  payments.

Characteristics of Programs Reviewed and Related Improper Payment Estimates

The eight programs we reviewed serve a variety of purposes and are  administered by various agencies across the federal government, as  discussed below.

Supplemental Nutrition Assistance Program

The Department of Agriculture’s (USDA) Supplemental Nutrition  Assistance Program (SNAP) is the largest federally funded nutrition  assistance program, providing benefits to about 40 million people in fiscal  year 2018. SNAP is intended to help low-income households obtain a  more nutritious diet by providing them with benefits to purchase food from  authorized retailers nationwide. SNAP recipients receive monthly benefits  on an Electronic Benefit Transfer (EBT) card and redeem them for eligible  food at authorized food stores. The Food and Nutrition Act of 2008  established SNAP as a federally funded, state-administered program.  States, following federal guidelines, are responsible for program  administration. States determine applicant eligibility, calculate benefit  amounts, issue EBT cards to recipients, and investigate possible recipient  program violations.

USDA’s Food and Nutrition Service (FNS) pays the full cost of SNAP  benefits and shares 50 percent of administrative costs with the states. As  part of oversight responsibilities, FNS develops program regulations and  monitors states to ensure that they comply with program rules. FNS is  also directly responsible for authorizing and monitoring retail food stores  where recipients may purchase food.

In accordance with IPIA, USDA has annually reported an improper  payment estimate for SNAP since fiscal year 2004. In its fiscal year  2019 AFR, USDA reported an improper payment estimate of  approximately $4 billion, or 6.8 percent of SNAP outlays of $59.1 billion.

The Department of Education’s (Education) William D. Ford Federal  Direct Loan (Direct Loan) program authorizes Education to make loans,  through participating schools, to eligible undergraduate and graduate students and their parents. The Direct Loan program comprises four  types of loans: Subsidized Stafford, Unsubsidized Stafford, PLUS, and  Consolidation loans. Evidence of financial necessity is required for an  undergraduate student to receive a Subsidized Stafford loan; however,  borrowers at all income levels are eligible for the other three types.  Education originates the loans and disburses them through each  borrower’s school. Once a loan is disbursed, Education assigns a servicer  responsible for communicating with the borrower, providing information  about repayment, and processing payments from the borrower.

Education first reported an improper payment estimate for the Direct Loan  program in fiscal year 2013. In its fiscal year 2019 AFR, Education  reported an improper payment estimate of approximately $483 million, or  0.5 percent of Direct Loan program outlays of $92.9 billion.

Education’s Pell Grant program—the single largest source of grant aid for  postsecondary education—awards federally funded grants to low-income  undergraduate and certain post-baccalaureate students who are enrolled  in a degree or certificate program and have a federally defined financial  need. Students are eligible to receive Pell Grants for no more than 12  semesters (or the equivalent). To qualify, an applicant must, in addition to  satisfying other requirements, demonstrate financial need and not have  obtained a bachelor’s degree or a first professional degree. Grant  amounts depend on the student’s expected family contribution, the cost of  attendance (as determined by the institution), the student’s enrollment  status (full-time or part-time), and whether the student attends for a full  academic year or less.

Education first reported an improper payment estimate for the Pell Grant  program in fiscal year 2004. In its fiscal year 2019 AFR, Education  reported an improper payment estimate of approximately $646 million, or  2.2 percent of Pell Grant program outlays of $28.9 billion.

The Department of Health and Human Services’ (HHS) Children’s Health  Insurance Program (CHIP) expands health coverage to uninsured  children who are ineligible for Medicaid but cannot afford private  coverage. The states and the federal government jointly fund CHIP  benefit payments and administrative expenses. HHS’s Centers for  Medicare & Medicaid Services (CMS) oversees the program; however,  each state administers the program and sets its own guidelines regarding  eligibility and services according to federal guidelines.

HHS first reported an improper payment estimate for CHIP (based on  one-third of the states) in fiscal year 2008. In its fiscal year 2019 AFR,  HHS reported an improper payment estimate of approximately $2.7  billion, or 15.8 percent of CHIP outlays of $17.3 billion.

The Earned Income Tax Credit (EITC) administered by the Department of  the Treasury (Treasury) is a credit that offsets taxes owed by eligible  taxpayers, and because the credit is refundable, EITC recipients need not  owe taxes to receive a benefit. If the taxpayer’s credit exceeds the  amount of taxes due, the Internal Revenue Service (IRS) issues a refund  of the excess to the taxpayer. To claim the EITC, the taxpayer must work  and have earnings that do not exceed the phaseout income of the  credit. Additional eligibility rules apply to any children that a taxpayer  claims for calculating the credit. Among other criteria, a qualifying child  must meet certain age, relationship, and residency requirements.

Treasury first reported an improper payment estimate for EITC in fiscal  year 2003. In its fiscal year 2019 AFR, Treasury reported an improper  payment estimate of approximately $17.4 billion, or 25.3 percent of EITC  outlays of $68.7 billion.

Through its Prosthetic and Sensory Aids Service (PSAS), the Department  of Veterans Affairs’ (VA) Veterans Health Administration (VHA) provides  prosthetics to veterans who have experienced the loss or permanent  impairment of a body part or function. The items VA provides include  those worn by the veteran, such as an artificial limb or hearing aid; those  that improve accessibility, such as ramps and vehicle modifications; and  devices surgically placed in the veteran, such as hips and pacemakers. In  general, veterans enrolled in the VA health care system with a medical  need for a prosthetic service or item are eligible; however, additional  eligibility criteria for certain services or items may apply.

PSAS officials in VA’s central office provide overall administration of VA’s  provision of prosthetic items, including allocating funding among various  networks, monitoring spending, and establishing and monitoring  mechanisms to evaluate the agency’s performance. PSAS processes  prescriptions and provides the prescribed items to individual veterans.  PSAS government credit card holders, typically at VA medical centers,  perform administrative actions—such as obtaining additional information  from the prescribing clinician, obtaining price quotes from contractors,  and creating purchase orders—to process prescriptions. PSAS also has  staff who provide clinical services to veterans, such as evaluating  prosthetic needs and designing and fitting artificial limbs.

VA first reported an improper payment estimate for PSAS in fiscal year  2017. In its fiscal year 2019 AFR, VA reported an improper payment  estimate of approximately $60 million, or 2.1 percent of PSAS outlays of  $2.9 billion.

Old Age, Survivors, and Disability Insurance Program

The Social Security Administration’s (SSA) Old Age, Survivors, and  Disability Insurance program (OASDI), collectively referred to as Social  Security, provides cash benefits to eligible U.S. citizens and residents.  OASDI is financed largely on a pay-as-you-go basis. Specifically, OASDI  payroll taxes, paid each year by current workers, are primarily used to  pay benefits provided during that year to current beneficiaries.

OASDI consists of two separate insurance programs that SSA  administers under the Social Security Act. Old Age and Survivors  Insurance (OASI) provides benefits to retired workers, their families, and  survivors of deceased workers. The monthly benefit amount depends on  a worker’s earnings history and the age at which he or she chooses to  begin receiving benefits, along with other factors. Benefits are paid to  workers who meet requirements for the time they have worked in covered  employment—that is, jobs through which they have paid Social Security  taxes. Disability Insurance (DI) provides cash benefits to working-age  adults who are unable to work because of long-term disability. SSA  generally considers individuals to have a disability if (1) they cannot  perform work that they did before and cannot adjust to other work  because of their medical condition(s) and (2) their disability has lasted or  is expected to last at least 1 year or is expected to result in death.  Further, individuals must have worked and paid into the program for a  minimum period of time to qualify for benefits. To ensure that only  beneficiaries who remain disabled continue to receive benefits, SSA is  required to conduct periodic continuing disability reviews in certain  circumstances.

SSA first reported an improper payment estimate for OASDI in fiscal year  2004. In its fiscal year 2019 AFR, SSA reported an improper payment  estimate of approximately $2.7 billion, or 0.3 percent of OASDI program  outlays of $948 billion.

SSA’s Supplemental Security Income (SSI) is a federal income  supplement program funded by general tax revenues (not Social Security  taxes). The program provides payments to low-income aged, blind, and  disabled persons—both adults and children—who also meet financial  eligibility requirements. For adults, a disability is defined as the inability to  engage in any substantial gainful activity because of any medically determinable physical or mental impairment(s) that can be expected to  result in death or has lasted or can be expected to last for a continuous  period of not less than 12 months. To ensure that only recipients who  remain disabled continue to receive benefits, SSA is required to conduct  periodic continuing disability reviews in certain circumstances.

To be eligible to receive monthly SSI payments, the adult individual’s (or  married couple’s) or child’s (and parent’s) monthly countable income has  to be less than the monthly federal SSI benefit amount. The amount of  the monthly SSI payment is then determined based on the countable  income. In most cases, countable income received in the current month  affects the SSI payment amount 2 months later. Furthermore, countable  resources—such as financial institution accounts—must not exceed the  maximum allowable threshold. While recipients are required to report  changes in their income and financial resources, SSA also conducts  periodic redeterminations to verify that recipients are still eligible for SSI.

SSA first reported an improper payment estimate for SSI in fiscal year  2004. In its fiscal year 2019 AFR, SSA reported an improper payment  estimate of approximately $5.5 billion, or 9.7 percent of SSI program  outlays of $56.9 billion.

Selected Agencies Generally Used Improper Payment Estimation Methodology Results as the Basis for Identifying Root Causes of Improper Payments Five Out of Six Agencies Used Improper Payment Estimation Methodology Results as the Basis for Identifying Root Causes of Selected Programs’ Improper Payments

We found that five out of six agencies—USDA, Education, HHS, VA, and  SSA—used the results of their improper payment estimation  methodologies as the basis for identifying the root causes of improper  payments for the selected programs we reviewed. Specifically, the  agencies generally used a two-step process to identify root causes of  improper payments. First, the agencies reviewed a sample of payments  to identify which payments were improper and to establish an improper  payment rate. Second, the agencies analyzed the improper payment  results to determine the causes of error. Further details on each  agency’s process are provided below.

USDA: According to USDA’s fiscal year 2018 AFR, FNS used SNAP’s  Quality Control System to identify improper payments and determine  improper payment rates for fiscal year 2018. According to agency  officials, SNAP improper payment root causes occur at the state level.  According to agency officials, as required by the Food and Nutrition  Act of 2008 and subsequent program regulations, FNS requires states  to conduct root cause analyses and develop corrective action plans  because of the unique circumstances in each state owing to  flexibilities under statute and regulations. SNAP’s Quality Control  system uses a two-tier approach to report improper payments. In the  first tier, each month, state agencies follow federal sampling  requirements to select samples of households that participated in  SNAP in their states and conduct quality control reviews to determine  whether each selected household was eligible and received the right  amount of benefits. In the second tier of the process, Federal SNAP  staff select a subsample of the state data for review to confirm the  validity of the states’ findings. Federal SNAP staff use that subsample  data to aggregate the root cause information at a nationwide level in  order to categorize the data into the OMB root cause categories for  fiscal year 2018 reporting.

Education: According to Education’s fiscal year 2018 AFR, Education  conducted a risk-based, nonstatistical sample and estimation  methodology, which OMB approved, to estimate Pell Grant and Direct  Loan improper payment rates for fiscal year 2018 reporting. As part  of this estimation process, Education analyzed identified improper  payments to determine improper payment root causes.

HHS: According to HHS’s fiscal year 2018 AFR, HHS estimated the  CHIP improper payment rate for fiscal year 2018 reporting through the  Payment Error Rate Measurement (PERM) program. CHIP improper  payment root causes were identified at both the agency and state  levels. Specifically, to determine improper payment root causes at the  agency level, HHS analyzed the issues identified during the PERM  review and identified primary drivers of the national PERM rate for  CHIP. HHS also provided improper payment results to each state and  required them to conduct more in-depth state-level root cause  analyses as part of developing their corrective action plans.

VA: According to VA’s fiscal year 2018 AFR, VA conducted a  statistical sample and estimation methodology to estimate the PSAS  improper payment rate for fiscal year 2018 reporting. VA then  analyzed the improper payments identified during testing to determine  improper payment root causes.

SSA: According to SSA’s fiscal year 2018 AFR, SSA conducts  stewardship reviews each fiscal year to estimate the improper  payment rates for OASDI and SSI. Although SSA considers the  stewardship review data sufficient to provide statistically reliable data  on the overall payment accuracy of OASDI and SSI, SSA considered  deficiency data from the most recent 5 years of stewardship reviews  to determine improper payment root causes for each program for its  fiscal year 2018 reporting.

Treasury Used 2006 through 2008 Tax Year Data to Identify Reported Root Causes of Fiscal Year 2018 EITC Improper Payments

Treasury identified the root causes of EITC improper payments for fiscal  year 2018 reporting based on the most recent detailed 3-year EITC  compliance study IRS conducted, using data from tax years 2006 through  2008. IRS officials acknowledged that using older data creates  additional potential for error; however, they stated that IRS is only able to  conduct in-depth compliance studies on major refundable income tax  credits, including EITC, on a rotating basis.

IRS also conducted in-depth EITC compliance studies for tax years 1997  and 1999. These studies and IRS’s 2006 through 2008 compliance study,  identified income misreporting and qualifying child errors as the main  sources of errors. Therefore, agency officials indicated that Treasury is  comfortable with using the 2006 through 2008 data as the basis for  determining the root causes of fiscal year 2018 EITC improper payments.  However, Treasury has reported changes to the tax environment since  2008, including legislative revisions that may have affected taxpayer  compliance behavior. Specifically, EITC-related changes include  expanding the credit to a third child, establishing new criteria for claiming  a qualifying child, and amending the “age test” for qualifying children,  among others. Furthermore, the 2006 through 2008 compliance study did  not take into account the Protecting Americans from Tax Hikes Act of  2015 program integrity provisions that required tax filers to provide Form  W-2 payer information to IRS for verification earlier than in previous tax  years.

Federal internal control standards state that management should use  quality information to achieve the entity’s objectives. As part of these  standards, management obtains relevant data from reliable internal and  external sources in a timely manner and uses quality information to make  informed decisions and evaluate the entity’s performance in achieving  objectives and addressing risks. Quality information is appropriate,  current, complete, accurate, accessible, and provided on a timely basis.  Although a specific delivery date has not been set, agency officials stated  that IRS plans to conduct another in-depth EITC compliance analysis  within the next 2 years. We agree with Treasury’s plan to conduct another  EITC compliance analysis using more timely data. However, until  Treasury conducts an EITC improper payment root cause analysis using  more timely data, it will be uncertain whether identified root causes are  sufficiently relevant to inform decisions and evaluate risks. Specifically,  continued use of outdated information to evaluate EITC improper  payments increases the risk that Treasury may not be identifying these  payments’ true root causes and therefore will lack quality information  needed to develop appropriate corrective actions and reduce them.

Most Selected Agencies Developed Corrective Actions That Correspond to Identified Root Causes of Improper Payments Four Out of Six Agencies Developed Corrective Actions That Correspond to Identified Root Causes of Improper Payments for the Selected Programs

Four out of six agencies—Education, HHS, VA, and SSA—developed  corrective actions that correspond to identified root causes of improper  payments for the selected programs we reviewed, in accordance with  OMB guidance. Specifically, we found that Education and VA developed  corrective actions corresponding to each root cause of improper  payments identified for fiscal year 2018 in Education’s Direct Loan and  Pell Grant programs and VA’s PSAS, respectively.

In addition, HHS stated that it developed corrective actions that  corresponded to the root causes it determined to be significant to CHIP  improper payments for fiscal year 2018, prioritizing large dollar over  smaller dollar value root cause categories. Corrective action plans for  CHIP improper payments were developed at both the agency and state  levels. According to agency officials, CMS helped individual states  develop and implement state-specific PERM corrective action plans to  address the errors identified in each state. In addition, because each  state’s errors do not necessarily represent errors that are the main drivers  of the national PERM rate, CMS developed agency-level corrective action  plans focused on those drivers, which typically occurred across multiple  states.

We also found that SSA’s corrective actions corresponded to root causes  of improper payments identified in OASDI and SSI for fiscal year 2018.  However, SSA did not develop corrective actions corresponding to three  of the six major root causes it identified for OASDI improper payments  based on its stewardship review findings. Agency officials explained that  SSA’s corrective action development process was decentralized among  the different SSA components, and therefore, there was no formalized  process for components to develop corrective actions for all identified root  causes. SSA has since developed a new standardized improper payment  strategy and updated procedures to implement the strategy for fiscal year  2020. Although the scope of our review focused on processes in place for  fiscal year 2018, we found that the updated procedures, if effectively  implemented, will address our concerns because they include control  activities designed to help ensure that corrective actions that SSA  develops and implements correspond to the identified root causes of  improper payments, as directed by OMB guidance. Specifically, the  updated procedures direct SSA components to identify root causes of  improper payments and develop mitigation strategies for each; conduct  cost-benefit analyses for such strategies; and after considering these  analyses, determine and prioritize necessary corrective actions.

USDA Did Not Develop Agency Corrective Actions That Correspond to Identified Root Causes of SNAP Improper Payments

In contrast to HHS, which developed both agency- and state-level  corrective actions for its state-administered CHIP, USDA did not develop  agency-level corrective actions corresponding to the root causes of SNAP  improper payments. USDA’s IPIA corrective action plan guidance directs  its components, including FNS, to develop corrective actions that  correspond to the identified root causes of improper payments for  programs that are susceptible to significant improper payments. Instead  of developing agency-level SNAP corrective actions, FNS requires the  states to develop state-level corrective actions. Additionally, FNS  provided technical assistance and support to the individual states to help  them improve payment accuracy. As part of this assistance, agency  officials stated that FNS regional offices provided routine formal training  and guidance to the states and conducted site visits.

According to agency officials, FNS did not develop agency-level  corrective actions corresponding to the root causes of SNAP improper  payments because FNS requires the states to develop individual state- level corrective actions. Additionally, because of varying root causes and  the uniqueness of issues identified among the states, agency officials  believe that state corrective actions may not easily aggregate to the state  level. However, FNS’s procedures did not include a process to analyze  state-level root causes to identify similarities and develop agency-level  corrective actions, if warranted, to help address them. According to  agency officials, FNS has made significant improvements in the last few  years regarding its controls over SNAP. The officials said that FNS has  also implemented major changes in oversight in the last few fiscal years  to address previously identified deficiencies among the states. While  these changes may be valuable in improving agency oversight and states  may have unique circumstances that could lead to varying state-identified  root causes of improper payments, FNS is ultimately responsible for  preventing and reducing improper payments within SNAP.

OMB guidance directs agencies to develop and implement appropriate  corrective actions that respond to the root causes of improper payments  to prevent and reduce them. OMB guidance also directs agencies to  ensure that managers; programs; and, where applicable, states are held  accountable for reducing improper payments. Additionally, federal  internal control standards state that management should establish and  operate activities to monitor the internal control system and evaluate the  results and remediate identified internal control deficiencies on a timely  basis. As part of these standards, management retains responsibility for  monitoring the effectiveness of internal control over the assigned  processes that external parties, such as state agencies, perform. Without  considering similarities of root causes of SNAP improper payments  among the states, USDA will be uncertain whether developing and  implementing agency-level corrective actions (in addition to state-level  actions) would also help to effectively reduce them.

Treasury Did Not Develop Corrective Actions That Correspond to Identified Root Causes of EITC Improper Payments

Instead of developing corrective actions corresponding to the identified  root causes of EITC improper payments for fiscal year 2018, Treasury  addressed improper payments through IRS’s compliance programs and  through outreach and education efforts to taxpayers and preparers.  According to agency officials, although some of the outreach efforts are  indirectly related to root causes identified, it is difficult to link those efforts  to the reduction of errors that result from being unable to authenticate  eligibility—which Treasury considers the biggest issue in the EITC  program—because of the complexity of statutory eligibility requirements.  Although Treasury uses information from SSA and HHS to help IRS verify  residency and relationship information for parents and children,  Treasury’s strategy for addressing the root causes of EITC improper  payments does not include continuing efforts to identify and reach out to  additional agencies to (1) determine how they verify information for  certain eligibility-based programs and whether they use strategies that  Treasury could adopt or (2) identify other potential data sources that  could be used to verify EITC information or confirm that other data  sources do not exist. According to agency officials, such inquiries are  not included because the eligibility requirements for EITC are not always  the same as requirements for other government programs.

Additionally, Treasury’s fiscal year 2018 AFR states that because of the  nature of EITC, corrective actions implemented by IRS alone will not  significantly reduce EITC improper payments. For example, according to  Treasury officials, legislative changes are needed to help address certain  EITC improper payments. While Treasury has made certain legislative  proposals related to providing IRS greater flexibility to address  correctable errors and increasing oversight of paid tax return preparers, it  has not made proposals to help address EITC eligibility criteria issues.  Additionally, Treasury’s strategy does not include identifying and  proposing legislative changes needed to help reduce EITC improper  payments related to these or other issues, such as those related to the  inability to authenticate taxpayer eligibility discussed above.

OMB guidance directs agencies to develop and implement appropriate  corrective actions that respond to the root causes of improper payments  to prevent and reduce them. Further, federal internal control standards  state that management should use quality information to achieve the  entity’s objectives. As part of these standards, management designs a  process that uses the entity’s objectives and related risks to identify the  information requirements needed to achieve the objectives and address  the risks and obtains relevant data from reliable internal and external  sources in a timely manner based on the identified information  requirements. While we recognize the unique eligibility requirements for  EITC, until Treasury coordinates with other agencies to identify potential  strategies or data sources that may help in determining eligibility, it will be  uncertain whether Treasury can leverage additional sources to help verify  data. Additionally, without identifying and proposing legislative changes to  help resolve such issues, Treasury will be at risk of continuing to be  unable to significantly reduce EITC improper payments.

All Six Agencies Communicated Improper Payment Corrective Action Plan Information to Internal Stakeholders, but Several Did Not Monitor Progress or Measure Effectiveness

All six agencies responsible for the programs we reviewed communicated  with internal agency stakeholders regarding their improper payment  corrective action plan information, in accordance with OMB guidance and  federal internal control standards. However, as shown in table 3, three of  the four agencies—Education, HHS, and SSA—that developed corrective  actions corresponding to the identified root causes either did not establish  planned completion dates, monitor the progress, or measure the  effectiveness of their corrective actions. In fact, we found that VA was  the only agency that measured the effectiveness of each corrective action  for the selected program (PSAS) that we reviewed. As previously  discussed, USDA and Treasury did not develop agency corrective actions  corresponding to the identified root causes of improper payments for their  selected programs and therefore did not establish planned related  completion dates, monitor progress, or measure the effectiveness of such  corrective actions.

Selected Agencies Have Processes in Place to Communicate with Internal Stakeholders regarding Corrective Action Plan Information

All six agencies we reviewed communicated information regarding the  selected programs’ corrective action plans to internal stakeholders,  consistent with OMB guidance and federal internal control standards.  OMB M-18-20 directs agencies to ensure that managers, accountable  officers (including the agency head), and program officials are held  accountable for reducing improper payments. Additionally, federal internal  control standards state that management should internally communicate  the necessary quality information to achieve the entity’s objectives. As  part of these standards, management communicates quality information  down, across, up, and around reporting lines to all levels of the entity. We  found that the six agencies communicated information, at least annually,  to such internal stakeholders, including the relevant agency head, chief  financial officer (CFO), and program managers. For example, some  selected agencies—Education, HHS, VA, and SSA—provided briefings to  the agency head and the CFO’s office regarding the status of the selected  program’s improper payment corrective action activities during fiscal year  2019 for the corrective actions reported for fiscal year 2018. USDA and  Treasury required their components to annually submit deliverables to the  office of the CFO and coordinate accordingly with the Office of the  Secretary as part of their fiscal year 2018 AFR reporting process.

Two Agencies Established Planned Completion Dates for the Selected Programs’ Corrective Actions

We found that two of the six agencies we reviewed—Education and VA— established planned completion dates for the selected programs’  corrective actions. Two agencies—HHS and SSA—did not consistently  establish planned completion dates for all the selected programs’  corrective actions, as required by IPIA. Two agencies—USDA and  Treasury—did not develop agency corrective actions corresponding to the  identified root causes of improper payments for their selected programs  and therefore did not establish planned completion dates for such  corrective actions. Further details on each agency’s process are provided  below.

USDA: As previously discussed, FNS did not develop corrective  actions at the agency level to address SNAP’s root causes of  improper payments and, as a result, did not have planned completion  dates for such corrective actions. However, in the event that FNS  develops agency-level corrective actions, USDA’s IPIA corrective  action plan guidance includes a directive for each corrective action to  have an estimated completion date.

Education: Education established planned completion dates for all  Direct Loan and Pell Grant corrective actions that were not legislative  proposals. For example, in fiscal year 2018, Education did not report a  planned completion date for Federal Student Aid’s (FSA) corrective  action related to proposed legislative changes, as the timeline for the  legislative process is subject to external factors outside of Education’s  control.

HHS: HHS did not consistently establish planned completion dates for  agency-level CHIP corrective actions. According to agency officials,  most agency-level CHIP corrective actions are unlikely to have  completion dates because the work is ongoing. We agree with  HHS’s determination that establishing completion dates for ongoing  corrective actions was not relevant. HHS provided a spreadsheet of  CHIP’s corrective actions, which included a column of target  completion dates. However, this column was not consistently filled out  for actions that were not considered either ongoing or voluntary state  processes. HHS officials stated that although HHS has a process for  its improper payment corrective action plans, this process is not  documented in formal policies and procedures. Instead, HHS uses  OMB guidance as its policies and procedures. Lack of formally  documented policies and procedures may have contributed to the  inconsistencies in HHS establishing planned completion dates for  agency-level CHIP corrective actions.

Treasury: As previously discussed, instead of developing corrective  actions to address root causes of EITC improper payments, Treasury  addressed improper payments through IRS’s compliance programs  and through outreach and education efforts to taxpayers and  preparers. According to agency officials, Treasury did not establish  planned completion dates for its compliance programs and outreach  efforts because these activities were ongoing in nature and completed  every year as part of IRS operations. We agree with Treasury’s  determination that establishing completion dates for EITC ongoing  compliance activities was not relevant. In the event that Treasury  develops corrective actions for EITC improper payments, Treasury’s  corrective action plan guidance includes a directive for each corrective  action to have an estimated completion date.

VA: VA established relevant planned completion dates for each PSAS  corrective action. In addition, each task associated with each  corrective action had a planned completion date.

SSA: SSA did not consistently establish relevant completion dates for  each OASDI and SSI corrective action. For example, SSA’s corrective  action plans included sections for “target completion.” However,  based on our review, these sections were not filled out consistently.  According to agency officials, the process for developing and  implementing its corrective actions was inconsistent because of SSA’s  decentralized corrective action plan process. As previously discussed,  SSA developed a new standardized improper payment strategy that if  effectively implemented will address these concerns. Specifically,  SSA’s procedures to implement this strategy include control activities  designed to help ensure that the agency establishes planned  completion dates for each corrective action, as required by IPIA.

IPIA requires agencies to report on the planned or actual completion date  of each action taken to address root causes of improper payments.  Federal internal control standards state that management should design  control activities to achieve objectives and respond to risks and  implement control activities through policies. Further, federal internal  control standards state that management should remediate identified  internal control deficiencies on a timely basis. As part of these standards,  management monitors the status of remediation efforts so that they are  completed on a timely basis. Additionally, federal internal control  standards state that management should implement its control activities  through policies. Without documented policies and procedures for its  improper payment corrective action plan process, including the  establishment of planned completion dates, HHS lacks assurance that  corrective action plan–related activities will be performed consistently.  Additionally, without planned completion dates, HHS cannot demonstrate  that it is effectively implementing and completing corrective actions timely  and therefore cannot ensure that they will help reduce improper  payments.

Two Agencies Currently Do Not Have a Documented Process in Place to Monitor the Progress of Implementing the Selected Programs’ Corrective Actions

Three of the four agencies—Education, HHS, and VA—that developed  corrective actions corresponding to the identified root causes monitored  the progress of the selected programs’ corrective actions, in accordance  with OMB guidance. However, HHS’s process was not documented in  policies and procedures. SSA did not monitor the progress for all relevant  OASDI and SSI corrective actions but has since implemented policies  and procedures to monitor such progress. USDA did not develop  corrective actions at the agency level that corresponded to the identified  root causes of improper payments for SNAP and therefore did not monitor  the progress of such corrective actions. In addition, USDA’s corrective  action plan guidance does not direct the agency to monitor the progress  of its corrective actions. Although Treasury did not have corrective actions  that corresponded to the root cause of improper payments, it did monitor  the progress of its compliance and outreach efforts that are intended to  help reduce EITC improper payments. Further details on each agency’s  process are provided below.

USDA: As previously discussed, FNS did not develop corrective  actions at the agency level to address SNAP’s root causes of  improper payments and, as a result, did not monitor the progress of  such corrective actions. In addition, USDA’s IPIA corrective action  plan guidance does not direct the agency to monitor the progress of  its corrective actions. Without agency-level corrective actions to  address the root causes of SNAP improper payments and a  documented process to monitor the progress of implementing such  agency-level corrective actions, USDA may miss opportunities to  reduce SNAP improper payments.

Education: Education monitored the progress of implementing each  Direct Loan and Pell Grant corrective action. We found that Education  maintained a spreadsheet to track the implementation status of each  corrective action annually. Specifically, the status of each corrective  action was updated to either “complete” or “open” for the annually  recurring and long-term, multiyear corrective actions. The actions  marked as “complete” had actual completion dates. Actions that  Education considered ongoing, such as needed updates to help clarify  verification requirements to the “Question and Answer” section of  FSA’s website, were updated as “not applicable.”

HHS: HHS monitored the progress of implementing each of its  agency-level CHIP corrective actions. Specifically, HHS tracked the  progress of implementing the corrective actions in a spreadsheet that  included status updates for each agency-level corrective action.  Agency officials stated that this information was updated  approximately two to three times each fiscal year through an online  interface; however, this process was not documented in policies and  procedures. Without a properly documented process and related  control activities, HHS is at increased risk that it may not consistently  monitor the progress of CHIP corrective actions and has less  assurance that such actions are implemented and completed timely.

Treasury: Treasury did not develop corrective actions that  corresponded to the root causes of EITC improper payments and, as  a result, did not monitor the progress of such corrective actions.  However, Treasury did monitor its compliance programs and outreach  efforts that are intended to help reduce EITC improper payments  during fiscal year 2018.

VA: VA monitored the progress of implementing each PSAS  corrective action. Specifically, we found that VA monitored the  progress for each corrective action each month by calculating a  completion percentage based on the status of tasks associated with  each corrective action.

SSA: SSA did not monitor the progress of implementing each OASDI  and SSI corrective action. According to agency officials, the  monitoring of corrective actions was inconsistent and evaluation of  corrective actions was limited because of SSA’s decentralized  corrective action plan process. As previously discussed, SSA  developed a new standardized improper payment strategy that if  effectively implemented will address these concerns. Specifically,  SSA’s procedures to implement this strategy include control activities  designed to help ensure that the agency monitors the progress of its  corrective actions, as directed by OMB guidance.

OMB guidance directs agencies to measure the progress of each  individual corrective action annually. Federal internal control standards  state that management should establish and operate activities to monitor  the internal control system and evaluate the results and remediate  identified internal control deficiencies on a timely basis. As part of these  standards, management monitors the status of remediation efforts so that  they are completed on a timely basis. Additionally, federal internal control  standards state that management should implement its control activities  through policies. Without monitoring the progress of its corrective actions,  USDA cannot demonstrate that it is effectively implementing and  completing its corrective actions timely and therefore cannot ensure that  they will contribute to a reduction in improper payments. Further, unless  HHS documents its process in policies and procedures, it will lack  assurance that the progress of its corrective actions is monitored  consistently and that such actions are implemented and completed timely.

One Out of Six Agencies Measured the Effectiveness of Corrective Actions for the Selected Programs

We found that one out of six agencies we reviewed—VA—measured the  effectiveness of the selected programs’ corrective actions, including the  establishment of reduction targets in accordance with OMB guidance.  Education, HHS, and SSA did not measure the effectiveness of their  corrective actions for the selected programs. In addition, USDA and  Treasury did not develop agency corrective actions corresponding to the  identified root causes of improper payments for their selected programs  and therefore did not measure the effectiveness of such corrective  actions. Further details on each agency’s process are provided below.

USDA: As previously discussed, FNS did not develop agency-level  corrective actions to address root causes of SNAP improper  payments. Instead, FNS provided technical assistance and support to  the individual states. According to agency officials, FNS cannot link  each technical assistance initiative it provides to the states to the  effect these efforts have on reducing payment integrity errors, as the  technical assistance provided to the states can vary significantly.  Additionally, USDA’s IPIA corrective action plan guidance did not  include direction for the agency to measure the effectiveness of its  corrective actions. Without agency-level corrective actions to address  the root causes of SNAP improper payments and a documented  process to measure the effect that agency actions have on improper  payments, USDA will be unable to demonstrate whether such actions  are effective in reducing improper payments and may risk continuing  ineffective actions.

In addition, as permitted by OMB, USDA did not establish a reduction  target for SNAP improper payments because it lacked a sufficient  baseline to accurately project future improper payment rates. USDA  plans to reestablish reduction targets for fiscal year 2021 reporting.

Education: Education’s policies and procedures state that to  measure the effectiveness of the corrective actions, FSA solicits input  from the corrective action owner, including, among other items,  whether measuring and monitoring of the effectiveness of the  corrective action has been established and a description of anecdotal  evidence available to confirm the effectiveness of the corrective  action. However, based on the procedures, it is unclear how the  corrective action owners will conduct this analysis to demonstrate  effectiveness. Education provided an example of communication to a  corrective action owner requesting, among other items, that the  corrective action owner (1) confirm that existing actions are focused  on the true root causes of the improper payments and are actually  reducing improper payments and (2) verify that existing corrective  actions are achieving the intended purposes and results. Education  officials informed us that although these items were discussed in  stakeholder meetings, FSA was unable and did not attempt to quantify  the direct effect of any one corrective action on the improper payment  estimates.

Education’s fiscal year 2018 AFR states that FSA does not attempt to  quantify the reduction of the improper payment estimates in terms of  percentage or amount due to Pell Grant and Direct Loan corrective  actions. It further states that quantifying of results is not feasible  because Education uses a nonstatistical alternative estimation  methodology. However, according to Education’s fiscal year 2019  AFR, Education implemented a statistical estimation methodology for  the fiscal year 2019 estimates. Education believes that the new  methodology will allow FSA to better measure the effectiveness of  corrective actions over time as FSA collects a baseline of statistically  valid improper payment estimates. According to agency officials, FSA  is currently refining its process for measuring the effectiveness of  corrective actions based on its new statistical estimation methodology.  However, until Education revises and documents its process to  include measuring the direct effect that its Pell Grant and Direct Loan  corrective actions have on improper payments, it will be unable to  demonstrate whether the corrective actions are effective in reducing  the associated improper payments and may risk continuing ineffective  actions.

As part of its overall payment integrity reporting in fiscal year 2018,  Education established program-wide reduction targets for Pell Grant  and Direct Loan. However, according to agency officials, because it  used an OMB-approved nonstatistical methodology, Education’s  confidence in using these results to establish reduction targets for the  upcoming fiscal year was limited. Specifically, Education’s fiscal year  2018 AFR states that imprecision and volatility in the improper  payment estimates continue to limit its ability to establish accurate  out-year reduction targets. Therefore, for fiscal years 2016 through  2018, Education set the upcoming fiscal year reduction targets to  match the current fiscal year reported improper payment rate for each  program. According to agency officials, Education plans to consider  the feasibility of setting meaningful reduction targets moving forward  with its new statistical methodology.

HHS: HHS did not measure the effectiveness of its corrective actions  for CHIP improper payments. In addition, as discussed above, HHS  does not have formal documented policies and procedures for its  improper payment corrective action plan process. According to  agency officials, establishing a one-to-one relationship between  specific corrective actions and resulting changes in the improper  payment rates is difficult because of the complexity of factors involved  that lead to them. However, until HHS develops and implements a  documented process to measure the effect that CHIP corrective  actions have on improper payments, it will be unable to demonstrate  whether the corrective actions are effective in reducing the associated  improper payments and may risk continuing ineffective actions.

As permitted by OMB’s implementing guidance, HHS did not establish  a program-wide reduction target for CHIP improper payments for  fiscal years 2019 or 2020, and does not anticipate setting one for  2021 because it lacks a sufficient baseline to accurately project future  improper payment rates. According to agency officials, HHS plans to  establish a CHIP reduction target for fiscal year 2022 reporting.

Treasury: Treasury did not develop specific corrective actions to  address root causes of EITC improper payments, so it could not  measure the effectiveness of its corrective actions. Agency officials  recognized that the current actions on their own will be unable to  significantly reduce the amount of EITC improper payments. As  approved by OMB, Treasury did not establish a program-wide  reduction target for EITC improper payments for fiscal year 2018  reporting. However, Treasury set a reduction target for EITC  improper payments in its fiscal year 2019 AFR, per OMB guidance.

VA: VA has documented procedures in place to measure the  effectiveness of its corrective actions for PSAS improper payments.  As part of this process, VA set reduction targets and timelines for  reducing the errors associated with each corrective action. VA  maintained a timeline spreadsheet showing the corrective action  reduction targets by year and the percentage of improper payments it  expects to be reduced once each corrective action is fully  implemented. VA updated the spreadsheet at the end of fiscal year  2019 with the current results of the effectiveness measure for  corrective actions reported in fiscal year 2018. In addition, VA also set  a program-wide reduction target for PSAS improper payments.

SSA: SSA did not measure the effectiveness of its corrective actions  for OASDI and SSI improper payments. According to agency officials,  SSA did not have procedures to collect the necessary data and  therefore was unable to measure the effectiveness of its corrective  actions. SSA’s procedures for its new standardized improper payment  strategy (discussed above) direct responsible components to define  the metrics and information necessary to evaluate the corrective  actions and to determine if the actions are effectively reducing  improper payments. However, it is still unclear which metrics will be  used to determine the effect that OASDI and SSI corrective actions  have on the corresponding root causes to demonstrate effectiveness.  Until SSA develops and implements a documented process to  measure the effect that the OASDI and SSI corrective actions have on  improper payments, it will be unable to demonstrate whether the  corrective actions are effective in reducing the associated improper  payments and may risk continuing ineffective actions.

As part of its overall payment integrity reporting in fiscal year 2018,  SSA established program-wide reduction targets for both programs.  However, some of SSA’s reduction targets have remained constant  since fiscal year 2004 reporting. Agency officials stated that  although SSA believes OASDI’s payment accuracy rate is  exceptionally high, if SSA’s mitigation strategies help decrease  improper payments, it would consider changing the reduction target.  For SSI, agency officials stated that SSA believes that SSI’s program  complexity and reliance on self-reporting have made meeting the  current accuracy goal challenging. Agency officials further stated that  if planned mitigation strategies help decrease improper payments,  SSA would consider changing the SSI reduction target.

OMB guidance directs agencies to measure the effectiveness of each  individual corrective action annually. Agencies may measure the  effectiveness of corrective actions by assessing the results of actions  taken to address the root causes, such as the performance and outcomes  of these processes. In addition, OMB guidance states that for long-term,  multiyear corrective actions, agencies should identify annual benchmarks  used to demonstrate the initial effect on improper payment prevention and  reduction. For corrective actions already in place, agencies should be  able to describe how they evaluate these actions’ effectiveness and the  results. Federal internal control standards state that management should  establish and operate activities to monitor the internal control system and  evaluate the results. As part of these standards, management performs  ongoing monitoring of the design and operating effectiveness of the  internal control system as part of the normal course of operations.  Additionally, federal internal control standards state that management  should implement its control activities through policies. Unless USDA,  Education, HHS, and SSA develop and implement a process that clearly  links corrective actions to effectively addressing improper payments, they  will be uncertain whether the actions are actually reducing improper  payments and the agencies may risk continuing ineffective actions.

Further, unless these processes are documented in policies and  procedures, agencies will lack assurance that the effectiveness of their  corrective actions is measured consistently.

Developing corrective action plans that respond to identified root causes  of improper payments is a critical component in government-wide efforts  to reduce improper payments. Agency processes to monitor the progress  and measure the effectiveness of such plans are also essential to  evaluating their efforts to address improper payments. However, certain  agencies have not effectively taken these steps for the selected programs  we reviewed.

For example, USDA and Treasury have not developed agency-wide  corrective actions that correspond to the identified root causes of  improper payments in their SNAP and EITC programs, respectively, that  would better position these agencies to reduce and prevent them. Also,  HHS lacks important information to monitor its efforts to address CHIP  improper payments because it does not consistently establish planned  completion dates for agency-level corrective actions. Additionally, USDA,  Education, HHS, and SSA do not have sufficient processes in place to  measure the effectiveness of corrective actions to address improper  payments for the selected programs we reviewed. Unless agencies  develop corrective action plans that correspond to the root causes of  improper payments and implement processes to effectively monitor  progress and measure their effectiveness, their ability to ensure that their  actions will reduce improper payments will be limited.

We are making the following seven recommendations—one each to  Education, HHS, and SSA and two each to USDA and Treasury.

The Administrator of FNS should develop and implement a process,  documented in policies and procedures, to analyze SNAP state-level root  causes to identify potential similarities among the states and develop and  implement SNAP agency-level corrective actions, if appropriate, to help  address them. (Recommendation 1)

The Secretary of Agriculture should revise USDA’s procedures to include  processes for monitoring the progress and measuring the effectiveness of  improper payment corrective actions. The process for measuring the  effectiveness of corrective actions should clearly demonstrate the effect  USDA’s corrective actions have on reducing improper payments.  (Recommendation 2)

The Secretary of Education should revise and document Education’s  process for measuring the effectiveness of its corrective actions based on  its new statistical estimation methodology for Direct Loan and Pell Grant  improper payments. This process should clearly demonstrate the effect  Education’s corrective actions have on reducing improper payments.  (Recommendation 3)

The Secretary of Health and Human Services should document in policies  and procedures HHS’s improper payment corrective action plan process.  As part of these procedures, HHS should include processes for (1)  establishing planned completion dates, (2) monitoring the progress of  implementing corrective actions, and (3) measuring the effectiveness of  improper payment corrective actions. The process for measuring the  effectiveness of corrective actions should clearly demonstrate the effect  HHS’s corrective actions have on reducing improper payments.  (Recommendation 4)

The Secretary of the Treasury should determine whether Treasury’s  current improper payment root cause analysis provides sufficiently  relevant information that can be used as a basis for proposed corrective  actions in reducing EITC improper payments and, if not, update the  analysis using more timely data to ensure their reliability for identifying  root causes of EITC improper payments. (Recommendation 5)

The Secretary of the Treasury should update Treasury’s strategy for  addressing the root causes of EITC improper payments to include (1)  coordinating with other agencies to identify potential strategies and data  sources that may help in determining EITC eligibility and (2) determining  whether legislative changes are needed, and developing proposals as  appropriate, to help reduce EITC improper payments, such as those  related to the inability to authenticate taxpayer eligibility.  (Recommendation 6)

The Commissioner of SSA should develop and implement a process,  documented in policies and procedures, to measure the effectiveness of  SSA’s corrective actions for OASDI and SSI improper payments. This  process should clearly demonstrate the effect SSA’s corrective actions  have on reducing improper payments. (Recommendation 7)

We provided a draft of this report for comment to OMB, USDA, Education,  HHS, Treasury, VA, SSA, and the Council of the Inspectors General on  Integrity and Efficiency (CIGIE). We received written comments from five  agencies—USDA, Education, HHS, VA, and SSA—which are reproduced  in appendixes I through V and summarized below. The Assistant Director  of Treasury’s Risk and Control Group also provided comments in an  email, which are summarized below. Treasury, HHS, VA, and SSA also  provided technical comments, which we incorporated as appropriate.  CIGIE and OMB liaisons informed us that CIGIE and OMB had no  comments on the report.

In its written comments, USDA stated that it generally agrees with our  findings and recommendations. USDA stated that FNS has agency-level  corrective actions that correspond to the identified root causes and  establishes planned completion dates, monitors the progress, and  measures the effectiveness of SNAP’s corrective actions. However,  USDA officials did not provide documentation or other information  supporting such agency-level corrective actions and efforts. Rather, as  discussed in our report, FNS provides technical assistance and support to  the states to help them improve payment accuracy and requires them to  develop state-level corrective actions. Because FNS’s initiatives do not  address specific root causes, we continue to believe that USDA does not  have agency-level corrective actions that correspond to the identified root  causes of SNAP improper payments.

In regard to our recommendation to FNS to develop and implement a  process to analyze SNAP state-level root causes and take other related  actions, FNS stated that it already has an existing process and  recommended that we revise our recommendation to indicate that its  existing process should be formalized. In our report, we acknowledge that  under statutory requirements and program regulations, FNS requires the  states to identify the root causes and develop corrective actions that  address them. However, USDA did not provide any evidence that FNS  analyzes the states’ root causes to identify similarities and develop  corrective actions at the agency level. Therefore, we continue to believe  that our recommendation to FNS to develop and implement this process  is valid to help ensure that it develops corrective actions at the agency  level, if appropriate, and to help reduce improper payments within SNAP.

In regard to our recommendation to revise USDA’s procedures, USDA  stated that it will develop a proposed action plan to revise its procedures  for monitoring the progress and measuring the effectiveness of improper  payment corrective actions and the revised process will focus on the  impact corrective actions have on the corresponding root causes of  improper payments. The actions USDA described, if implemented  effectively, would address our recommendation.

In its written comments, Education neither concurred nor disagreed with  our recommendation, stating that FSA will continue to evaluate and refine  its processes to measure corrective actions and the effectiveness of  these actions. Further, Education stated that FSA’s measurement of  corrective action effectiveness and root cause identification will gain  additional precision as FSA collects annual improper payment data and  builds upon the new baseline of statistically valid improper payment  estimates. Education stated that FSA annually measures the overall  effectiveness of its corrective action plans collectively against the  improper payment reduction targets, rather than measuring the  effectiveness of each individual corrective action. However, as discussed  in our report, OMB guidance directs agencies to measure the  effectiveness of each individual corrective action annually. We continue to  believe that our recommendation to Education is valid to help ensure that  Education’s corrective actions are effective in reducing improper  payments.

In its written comments, HHS stated that it does not concur with our  recommendation. Specifically, HHS stated that the portion of our  recommendation providing that HHS’s process for measuring the  effectiveness of corrective actions should clearly demonstrate their impact  on the corresponding root causes of improper payments is operationally  impossible and not required by OMB guidance. We acknowledge that  given the unique circumstances across federal agencies concerning  improper payments, OMB guidance provides some flexibility for how  agencies are to measure the effectiveness of their corrective actions.  However, if agencies’ corrective actions are effective, they should  ultimately reduce improper payments. Without being able to demonstrate  whether corrective actions are effective in reducing the associated  improper payments, agencies will be uncertain if their actions are actually  reducing improper payments and may risk continuing ineffective actions.  While we acknowledge that OMB guidance does not explicitly require  agencies to demonstrate the impact corrective actions have on the  corresponding root causes of improper payments, agencies are required  to analyze the root causes of improper payments and develop corrective  actions to reduce improper payments. As such, we clarified this portion of  our recommendation to indicate that HHS’s process should clearly  demonstrate the effect corrective actions have on reducing improper  payments, to better align with the purpose of corrective action plans. We  also made this revision to our recommendations to USDA, Education, and  SSA.

In its written comments, VA stated that PSAS supported improper  payments statutory requirements by completing annual audit reviews,  identifying root causes, and developing a national program action plan to  reduce improper payments. VA also stated that PSAS reduced improper  payments from 39.7 percent in fiscal year 2018 to 2.1 percent in fiscal  year 2019 and continues to make improvements through enhanced audit  reviews and consultation with PSAS sites.

In its written comments, SSA stated that it concurs with our  recommendation and will determine the most cost-effective strategies to  remediate the underlying causes of payment errors and monitor,  measure, and revise the strategies as needed. The actions SSA  described, if implemented effectively, would address our  recommendation.

In emailed comments, the Assistant Director of Treasury’s Risk and  Control Group neither concurred nor disagreed with our  recommendations. In regard to our recommendation to update its strategy  for addressing root causes of EITC improper payments, Treasury stated  that each year it indicates in its corrective action plan that IRS will  continue to work with Treasury to develop legislative proposals that will  improve refundable credit compliance and reduce erroneous payments.  Treasury also stated that its fiscal year 2020 budget request included two  legislative proposals that may improve refundable credit compliance and  reduce erroneous payments and that both proposals have been in the  President’s Budget for several years now. We acknowledge these  legislative proposals in our report, and note that although Treasury has  made certain legislative proposals, it has not made proposals to  specifically help address EITC eligibility criteria issues. Additionally, as  noted in the report, Treasury’s strategy does not include identifying and  proposing additional legislative changes needed to help reduce EITC  improper payments. Therefore, we continue to believe that our  recommendation to Treasury is valid to help ensure that Treasury  addresses EITC eligibility issues, which Treasury identifies as the primary  root cause for EITC improper payments.

We are sending copies of this report to the appropriate congressional  committees, the Director of the Office of Management and Budget, the  Secretary of Agriculture, the Secretary of Education, the Secretary of  Health and Human Services, the Secretary of the Treasury, the Secretary  of Veterans Affairs, the Commissioner of the Social Security  Administration, and other interested parties. In addition, this report is  available at no charge on the GAO website at http://www.gao.gov.

If you or your staffs have any questions about this report, please contact  me at (202) 512-2623 or davisbh@gao.gov. Contact points for our Offices  of Congressional Relations and Public Affairs may be found on the last  page of this report. GAO staff who made key contributions to this report  are listed in appendix VI.

Appendix I: Comments from the Department of Agriculture

Appendix II: Comments from the Department of Education

Appendix III: Comments from the Department of Health and Human Services

Appendix IV: Comments from the Department of Veterans Affairs

Appendix V: Comments from the Social Security Administration

Appendix VI: GAO Contact and Staff Acknowledgments

In addition to the contact named above, Matthew Valenta (Assistant  Director), Stephanie Adams (Auditor in Charge), William Beichner,  Susanna Carlton, Virginia Chanley, Anthony Clark, Lindsay Hollup,  James Kernen, and Diana Lee made key contributions to this report.

Improper payments—those made by the federal government to the wrong person, in the wrong amount, or for the wrong reason—are a significant problem. In fiscal year 2019, government-wide improper payment estimates totaled about $175 billion.

The law requires certain agencies to develop and monitor ways to reduce improper payments and take corrective actions to target their root causes. However, 2 agencies we reviewed did not develop corrective actions that corresponded to the root causes they identified. Further, most agencies did not measure the effectiveness of their actions.

We made 7 recommendations to address these issues.