Pressure Mounts to Eliminate Waste, Fraud and Abuse

The combination of a growing deficit and high levels of improper payments fuels the urgency to root out waste, fraud and abuse under federal entities. Legislation related to improper payments and fraud, coupled with guidance documents from OMB, GAO and the CFO Council, pin the spotlight on actions agencies must take to improve government stewardship of taxpayer money.

Patterns in federal outlays and the surplus/deficit have historically reflected times of war and economic activity. Nonetheless, recent outlays have continued to rise with an ever-growing federal deficit. In 2017, the federal deficit was approximately $665B and is expected to climb to $1T by FY 2020. Likewise, improper payments made by the federal government between FY 2004 and FY 2018 totaled $1.5T with a CAGR of 9.5%. (Improper payments are defined as payment made to the wrong person, in the wrong amount and/or for the wrong reason.)

Recognizing a need to better identify and report on improper payments and fraud and driving further attention to the matter, Congress and the administration have passed several laws and policies in recent years. Specifically, Congress passed five separate pieces of legislation since 2002 with two additional proposed bills. Moreover, the GAO has released some guidance to agencies to help mitigate and navigate the waste, fraud and abuse environment: the Green Book provides the standards for effective internal control systems and the Fraud Risk Framework provides best practices in managing fraud risks. The President’s Management Agenda (PMA), issued in March 2018, dedicated one of its Cross-Agency Priority (CAP) Goals to “Getting Payments Right.” The PMA rests strategies and milestones to help reduce the cash loss of taxpayers. Even more recently, the CFO Council issued an Antifruad Playbook in October 2018 to operationalize the principles outlined in the GAO Fraud Risk Framework.

Deltek research reveals that the top ten high priority programs in improper payments over the last several years include:

• HHS:  Medicaid
• HHS:  Medicare Fee-for-Service
• Treasury:  Earned Income Tax Credit (EITC)
• HHS:  Medicare Advantage (Part C)
• VA:  VA Community Care
• SSA:  OASDI
• SSA:  Supplemental Security Income (SSI)
• USDA:  SNAP
• Education:  Direct Loan
• Labor:  Unemployment Insurance

These top ten collectively make up 87% of the total IP in FY 2018 and 85% in anticipated FY 2019 figures. Further, HHS programs represent 55% of FY 2018 totals. While not necessarily classified as a high priority program, Deltek also dives into the waste, fraud and abuse found in federal contracting in areas of procurement officials, contractor billing and organizational conflict of interest.

For more information on the trends and drivers of government waste, fraud and abuse and the top programs influencing the increase in improper payments, please refer to Deltek’s recently published report, Technology Strategies for Federal Waste, Fraud and Abuse, 2019.