Payment Integrity in the FY 2020 Budget Request

Published: March 28, 2019

Waste, Fraud, and Abuse

The FY 2020 President’s Budget Request proposes payment integrity initiatives aimed at generating $162.5B in savings over 10 years.

The administration is prioritizing payment integrity to protect tax payer money specifically targeting improper payments that result in monetary loss.  Improper payments (IP) are defined as payments made by the government to the wrong person, in the wrong amount, or for the wrong reason. Improper payments include both overpayments and underpayments, and were estimated to total $151B in FY 2018. Although improper payments do not directly translate to fraud or monetary loss, they need to be addressed and reduced to protect the integrity of taxpayer and federal funds.

The budget proposes to drive improper payment prevention by expanding oversight and enforcement activities in the largest federal benefit programs such as Child Nutrition, Earned Income Tax Credit (EITC), Federal Employees’ Compensation Act (FECA), Medicaid, Medicare, Pell Grants, Social Security, Supplemental Nutrition Assistance Program (SNAP), and Unemployment Insurance (UI).

Preventing monetary loss is of utmost importance to the administration and is part of the Cross Agency Priority (CAP) goal of Getting Payments Right.  The budget proposal intends to stem monetary loss and clarify and streamline improper payment reporting requirements.  

The budget proposes to improve government-wide payment integrity through changes to the Improper Payments Information Act of 2002 (IPIA) aimed at reducing agency reporting burdens.  It also proposes to promote data analytics and data access to improve payment accuracy.

Specific efforts meant to reduce agency improper payments reporting burdens include:

  • Reduce burden of improper payment risk assessments.
  • Clarify the definition of improper payments. Agencies are currently required to place much emphasis and effort on reporting improper payments that do not result in a monetary loss, such as payments that simply lacked complete documentation but would have been made regardless of those errors.
  • Streamline reporting requirements to reduce burden.
  • Clarify requirements for IPERA compliance to improve improper payment prevention and reduction.
  • Reduce risk assessment burden by clarifying assessment method type.
  • Specifying which programs should be assessed for compliance annually by the Office of Inspectors General (OIG).
  • Increase interagency collaboration and reducing burden of duplicate working groups.
  • Increase the threshold of significant improper payments.
  • Improve accountability and transparency for material programs.
  • Provide the Do Not Pay (DNP) initiative the authority to include publically available data sources for review.

The budget also promotes the use of data analytics and data access to improve payment accuracy. Specifically, the budget lists to the following initiatives:

  • Expand access to the National Directory of New Hires (NDNH).
  • Eliminate constraints on the Do Not Pay (DNP) Business Center to work with states on improper payments.
  • Obtain authority for Do Not Pay to serve as a central repository for death records.
  • Share full death master file with Treasury’s DNP Business Center.

The budget also specifies payment integrity proposals for each high risk program. Below are those for programs with the largest improper payment values.  

  • HHS - Medicare Fee for Service Program
    • Expand prior authorization to additional Medicare fee-for-service items at high risk of fraud, waste, and abuse.
    • Prevent fraud by applying penalties on providers and suppliers who fail to update enrollment records.
    • Require reporting on clearinghouses and billing agents when Medicare providers and suppliers enroll in the program.
    • Assess a penalty on physicians and practitioners who order services or supplies without proper documentation.
    • Address improper payments of chiropractic services through targeted medical review.
    • Address overutilization and billing of durable medical equipment, prosthetics, and orthotics (DMEPOS) by expanding prior authorization.
    • Address excessive billing for durable medical equipment (DME) that requires refills on serial claims.
  • HHS - Medicaid Program
    • Strengthen CMS’s ability to recoup improper payments.
    • Implement pre-payment controls to prevent inappropriate personal care services (PCS) payments.
    • Allow States the flexibility to complete more frequent eligibility redeterminations.
    • Consolidate provider screening for Medicaid and CHIP.
  • HHS - Medicare and Medicaid Programs (crosscutting proposals)
    • Allow revocation and denial of provider enrollment based on affiliation with a sanctioned entity.
  • Treasury – Tax Administration – Earned Income Tax Credit (EITC)
    • Increase oversight of paid tax return preparers.
    • Provide more flexible authority for the Internal Revenue Service to address correctable errors.
    • Improve clarity in worker classification and information reporting requirements.
    • Expand mandatory electronic filing of W-2s.
    • Implement tax enforcement program integrity cap adjustment.
    • Require a Social Security Number (SSN) that is valid for employment to claim the EITC.
    • Increase and streamline recovery of unclaimed assets.
    • Increase delinquent Federal non-tax debt collections.

The Trump administration continues to place emphasis on combating improper payments and waste, fraud and abuse in federal programs.  As the administration and federal agencies continue to explore new and innovative ways to address the problem, contractors are likely to find opportunities in the areas of prescreening, big data, analytics, recapture audits, ID authentication, data warehousing, data authentication, predictive modeling, forensic accounting, and fraud case management.