OMB Provides More Guidance to Improve Payment Integrity

This document replaces previous guidance that was last updated in October 2014.  The new guidance is effective beginning with the current fiscal year. The appendix, entitled “Requirements for Payment Integrity Improvement,” focuses on prevention, reducing agency administrative burdens and lowering improper payment rates.

The opening OMB memo states that the new requirements are meant to “transform the improper payments compliance framework to create a more unified, comprehensive, and less burdensome set of requirements.”

The new document reorganizes information provided in the previous version, but also adds sections on Reporting (Part II), Prevention and Recovery (Part III), and The Do Not Pay Initiative (Part V). The new guidance is also longer than the previous guidance which consisted of only 55 pages. The new guidance totals 78 pages.

The new appendix is organized into five parts:

• Part I – Definitions and Determinations
• Part II – Reporting
• Part III – Prevention and Recovery
• Part IV – Compliance with the Improper Payment Requirements
• Part V – The Do Not Pay Initiative

The guidance gives agencies new, specific steps to use to prevent and reduce improper payments.  The section entitled “Preventing and Reducing Improper Payments” under “Part III - Prevention and Recovery,” provides agencies with information regarding:

• How should programs prevent and reduce improper payments?
• What factors should be assessed when developing a plan to improve the prevention and reduction of improper payments?
• When and how should programs establish reduction targets?
• Who should be accountable for improving the prevention and reduction of improper payments?

Combating waste, fraud and abuse in federal programs is a high priority for the administration.  This new guidance will give agencies more direction and resources for reporting, categorizing, and ultimately, reducing improper payments.  As federal agencies continue to explore new and innovative ways to address improper payments, opportunities for contractor products and services may emerge in the areas of prescreening, big data, analytics, recapture audits, ID authentication, data warehousing, data authentication, predictive modeling, forensic accounting, and fraud case management.