In a snapshot that underscores the financial management difficulties facing the government, nine federal agencies made $19.1 billion in improper payments during fiscal 1998, the General Accounting Office said yesterday.
The GAO report, released by Senate Governmental Affairs Committee Chairman Fred D. Thompson (R-Tenn.), shows that improper payments amounted to 7.1 percent of the $177 billion in Medicare benefit payments for 1998, 4.6 percent of an $18.6 billion rental assistance program, and 7 percent of the government's $20 billion food stamp program.
"The full extent of the government's improper payments is not known," the GAO concluded. Thompson called the GAO tally "quite astounding" and said, "We're dealing here with the tip of the iceberg."
The GAO, Congress's watchdog, indicated that the total amount of improper payments is undoubtedly much larger. The agency, for example, cited previous audits that found that Defense Department contractors voluntarily returned $984 million erroneously paid to them between 1994 and 1998.
Improper payments can be caused by fraud or simple clerical error, especially at agencies such as the Internal Revenue Service that handle millions of financial transactions under deadline pressure.
"Agency personnel lack needed information, rely on inaccurate data and/or do not have timely information," the GAO said, adding that few agencies perform "comprehensive quality control reviews" to determine the propriety of program expenditures.
In some agencies, the GAO found substantial overpayments to individuals receiving federal benefits and overpayments to contractors for services and supplies. Other cases involved unauthorized payments.
If the problem continues unchecked, Thompson said, improper payments could pose a significant burden on government coffers when the baby boom generation retires, increasing the costs of Medicare and Social Security, at a time when other federal expenditures also will likely rise.
"There's going to be a major collision of these factors that's going to result in billions and billions and billions of dollars wasted and sent out through negligence and fraud and simple inability to do anything about it because the demands are going to be so great," Thompson said.
In many cases, the government never recovers the lost money, the GAO said.
Thompson said that, of the 24 largest Cabinet departments and agencies, only nine reported estimates of overpayments. There is no overall requirement that they do so, he noted.
The nine agencies that reported their estimates of overpayments, which the GAO used for its study, "are to be commended" for making an effort to improve their internal financial controls, Thompson said. The GAO identified the nine as the departments of Agriculture, Health and Human Services, Housing and Urban Development, Labor, and Veterans Affairs; the Agency for International Development; the Office of Personnel Management; the Social Security Administration; and the U.S. Customs Service.
The GAO noted that some agencies are working to reduce improper payments. In 1996, the Medicare fee-for-service program made about $23 billion in improper payments, but it reduced such payments to $12.6 billion two years later by tightening procedures to prevent fraud and reduce errors.
The White House Office of Management and Budget has called on agencies to make a top priority of reducing errors in benefit payments. The OMB also may issue guidelines to provide for uniform reporting and disclosure of improper payments.
In a letter accompanying the GAO report, the OMB's acting deputy director for management, Deidre A. Lee, said, "We agree that our focus on this area should be expanded."