U.S. GOVERNMENT PUBLISHING OFFICE

WASHINGTON : 

1 

89–010 

" ! SENATE 116TH CONGRESS

1st Session 

REPORT

2019

116–35 

Calendar No. 76 

PAYMENT INTEGRITY INFORMATION 

ACT OF 2019 

R E P O R T 

OF THE

COMMITTEE ON HOMELAND SECURITY AND 

GOVERNMENTAL AFFAIRS 

UNITED STATES SENATE 

TO ACCOMPANY

S. 375 

TO IMPROVE EFFORTS TO IDENTIFY AND REDUCE 

GOVERNMENTWIDE IMPROPER PAYMENTS, AND FOR OTHER 

PURPOSES 

MAY 6, 2019.—Ordered to be printed 


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(II) 

COMMITTEE ON HOMELAND SECURITY AND GOVERNMENTAL AFFAIRS 

RON JOHNSON, Wisconsin, Chairman 

ROB PORTMAN, Ohio 

RAND PAUL, Kentucky 

JAMES LANKFORD, Oklahoma 

MITT ROMNEY, Utah 

RICK SCOTT, Florida 

MICHAEL B. ENZI, Wyoming 

JOSH HAWLEY, Missouri 

GARY C. PETERS, Michigan 

THOMAS R. CARPER, Delaware 

MAGGIE HASSAN, New Hampshire 

KAMALA D. HARRIS, California 

KYRSTEN SINEMA, Arizona 

JACKY ROSEN, Nevada 

GABRIELLE D’ADAMO SINGER, Staff Director 

JOSEPH C. FOLIO III, Chief Counsel 

DANIEL J. SPINO, Professional Staff Member 

DAVID M. WEINBERG, Minority Staff Director 

ZACHARY I. SCHRAM, Minority Chief Counsel 

ASHLEY E. POLING, Minority Director of Governmental Affairs 

LAURA W. KILBRIDE, Chief Clerk 


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1On June 13, 2018, the Committee approved S. 2948, Payment Integrity Information Act of 

2018. That bill is substantially similar to S. 375. Accordingly, this committee report is in large 

part a reproduction of Chairman Johnson’s committee report for S. 2948, S. Rep. No. 115–445. 

Calendar No. 76 

116TH CONGRESS REPORT " ! SENATE 1st Session 116–35 

PAYMENT INTEGRITY INFORMATION ACT OF 2019 

MAY 6, 2019.—Ordered to be printed 

Mr. JOHNSON, from the Committee on Homeland Security and 

Governmental Affairs, submitted the following 

R E P O R T 

[To accompany S. 375] 

[Including cost estimate of the Congressional Budget Office] 

The Committee on Homeland Security and Governmental Affairs, 

to which was referred the bill (S. 375) to improve efforts to identify 

and reduce Governmentwide improper payments, and for other 

purposes, having considered the same, reports favorably thereon 

without amendment and recommends that the bill do pass. 

CONTENTS 

Page 

I. Purpose and Summary .................................................................................. 1 

II. Background and Need for the Legislation ................................................... 2 

III. Legislative History ......................................................................................... 3 

IV. Section-by-Section Analysis .......................................................................... 4 

V. Evaluation of Regulatory Impact .................................................................. 5 

VI. Congressional Budget Office Cost Estimate ................................................ 5 

VII. Changes in Existing Law Made by the Bill, as Reported ........................... 9 

I. PURPOSE AND SUMMARY

The purpose of S. 375, the Payment Integrity Information Act of 

2019, is to improve efforts to identify and reduce Government-wide 

improper payments. The bill does this by codifying, updating, and 

improving previous improper payments laws.1


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2Pub. L. No. 111–204, (111th Cong.). 

3 U.S. Gov’t Accountability Office, GAO–18–377, Improper Payments: Actions and Guidance 

Could Help Address Issues and Inconsistencies in Estimation Processes 1 (2018) available at 

https://www.gao.gov/assets/700/692207.pdf. 4Pub. L. No. 107–300, (107th Cong.). 

5 Id. 

6Pub. L. No. 107–107 at 3561, (107th Cong.). 

7Garrett Hatch, Cong. Research Serv., R42878, Improper Payments and Recovery Audits: Legislation, Implementation, and Analysis (Oct. 18, 2013). 8 U.S. Gov’t Accountability Office, GAO–06–347, Improper Payments: Federal and State Coordination Needed to Report National Improper Payment Estimates on Federal Programs 

(2006). 9 U.S. Gov’t Accountability Office, GAO–12–573T, Improper Payments: Remaining Challenges 

and Strategies for Government-wide Reduction Efforts 11 (2012) available at https:// 

www.gao.gov/assets/590/589681.pdf. 10Pub. L. No. 112–248, (112th Cong.). 11 Id. 12 Id. 

II. BACKGROUND AND THE NEED FOR LEGISLATION

Improper payments are ‘‘any payment that should not have been 

made or that was made in an incorrect amount.’’ 2 In fiscal year 

(FY) 2017, the Government Accountability Office (GAO) estimated 

that Government-wide Federal improper payments totaled $141 billion dollars.3

Since 2002, Congress has passed piecemeal bills that, while incrementally improving statutory authorities, are not well coordinated. The foundation of improper payments legislation is the Improper Payments Information Act of 2002 (IPIA), which required 

Federal agencies to identify, prevent, and report improper payments. IPIA required Federal agencies to report on their actions to 

reduce improper payments on all programs or activities that exceed 

ten million dollars.4 IPIA also established definitions for ‘‘payment’’ 

and ‘‘improper payment.’’ 5 Later in 2002, Congress passed the Recovery Audit Act of 2002, which required agencies that enter into 

contracts exceeding five hundred million dollars to conduct proper 

oversight of contractor payments and employ recovery audits.6

As IPIA reporting requirements took effect, the number of agency 

programs that reported expanded, increasing the total amount of 

improper payments and the Government-wide improper payment 

rate from $45 billion in FY2004 to $108 billion in FY2012.7 In 

2006, GAO recommended that Congress revise and expand IPIA to 

better reduce improper payments.8

In 2010, Congress responded to GAO’s recommendation by passing the Improper Payments Elimination and Recovery Act of 2010 

(IPERA). IPERA defines in more detail the types of risk assessments agencies must complete. IPERA provides a detailed description of ‘‘significant’’ improper payments, which was previously up 

to agencies’ discretion. While IPERA made positive changes to improper payments law, GAO identified additional challenges requiring legislation.9

Two years later Congress passed the Improper Payments Elimination and Recovery Improvement Act of 2012 (IPERIA).10 In addition to refining definitions and reporting requirements, IPERIA requires the Office of Management and Budget (OMB) Director to 

identify a list of high-priority Federal programs for greater levels 

of oversight by the agencies.11 IPERIA also codifies the Do Not Pay 

Initiative.12 The Do Not Pay Initiative requires agencies to review 

a list of databases to verify the validity of a payment or award they 


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13 Id. 14 Bureau of the Fiscal Service, Do Not Pay Agency Implementation Guide For Treasury’s 

Working System, (2018), available at https://donotpay.treas.gov/ 

DNPAgencyImplementationGuidePublic.pdf. 15Pub. L. No. 114–186, (114th Cong.). 16 Id. 17 U.S.H.R., Office of the Law Revision Counsel U.S. Code, The Term ‘‘Positive Law,’’ available 

at http://uscode.house.gov/codification/term_positive_law.htm. 18Letter from Americans for Tax Reform, FreedomWorks, National Taxpayers Union, Project 

on Government Oversight, Taxpayers for Common Sense, and the Taxpayers Protection Alliance 

to Senator Ron Johnson (July 3, 2018) (on file with the Committee). 

are about to authorize.13 To carry out the Do Not Pay Initiative, 

the Treasury Department created the Do Not Pay Business Center 

to be a centralized analytics service center to help agencies comply 

with IPERIA.14

In 2015, Congress passed the Fraud Reduction and Data Analytics Act of 2015 to require the OMB Director and the Comptroller 

General of the United States to establish guidelines for agencies to 

follow based on leading practices identified by GAO.15 The bill required agencies to follow best practices established by GAO that 

focus on collecting and analyzing data from reporting mechanisms, 

similar to the Do Not Pay Business Center, to better prevent improper payments before they happen.16

While reviewing the history of improper payments legislation, 

the Committee found that IPIA, the Recovery Audit Act of 2002, 

IPERA, IPERIA, and the Fraud Reduction and Data Analytics Act 

of 2015 are not sufficiently coordinated. Under current law, statutory requirements concerning Federal improper payments are scattered throughout the U.S. Code, and some of these statutory requirements were not incorporated into the U.S. Code as positive 

law.17 These statutes, when taken in sum, lack sufficient coherence, leaving certain aspects up to agency interpretation. In order 

to improve the coherence of improper payments laws and to improve agency compliance, S. 375 repeals the previous improper payments laws and combines the language of each into a single new 

subchapter of the U.S. Code. The bill omits areas of duplication, 

and improves and updates areas that warrant attention. 

The Committee worked closely with the GAO, the Council of the 

Inspectors General on Integrity and Efficiency, and OMB on the 

legislation and received letters of support from the Project on Government Oversight, Americans for Tax Reform, FreedomWorks, National Taxpayers Union, Taxpayers for Common Sense, and the 

Taxpayers Protection Alliance.18

III. LEGISLATIVE HISTORY

S. 375 was introduced on February 7, 2019, by Senators Tom 

Carper (D–DE), Ron Johnson (R–WI), Gary Peters (D–MI), and 

Mike Braun (R–IN). The bill was referred to the Committee on 

Homeland Security and Governmental Affairs. 

The Committee considered S. 375 at a business meeting on February 13, 2019. S. 375 passed by voice vote en bloc with Senators 

Johnson, Portman, Paul, Lankford, Romney, Scott, Enzi, Hawley, 

Peters, Carper, Hassan, Harris, Sinema, and Rosen present. 


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IV. SECTION-BY-SECTION ANALYSIS OF THE BILL, AS REPORTED

Section 1. Short title 

This section establishes the short title of the bill as the Payment 

Integrity Information Act of 2018. 

Section 2. Improper payments 

This section moves several existing improper payments statutes 

to one place in the code. New Subchapter IV of Chapter 33 of Title 

31 now houses the Improper Payments Information Act of 2002, 

the Improper Payments Elimination and Recovery Act of 2010, the 

Improper Payments Elimination and Recovery Improvement Act of 

2012, and the Fraud Reduction and Data Analytics Act of 2015. 

This section also makes minor updates to these existing law as described below. 

Section 3352 is a rewrite of IPERA with some new subsections 

and new definitions. A definition of the term ‘‘scope’’ is included to 

explicitly explain all the factors agencies should consider when 

gauging the susceptibility to improper payments. 

Subsection (c) of 3352 integrates improper payment guidance 

from OMB Memorandum M–15–02. This guidance explains how insufficient documentation errors are to be classified as an improper 

payment. Incorporating this memorandum into section 3352 

strengthens the definition of the term improper payment. 

Subsection (c) of 3353 is a new addition that gives OMB the option to create one or more pilot programs to test potential accountability measures, incentives, and consequences for compliance and 

the elimination of improper payments. 

Section 3354 establishes the Do Not Pay Initiative, which was 

originally authorized in IPERIA. Subsection (e) adds to the Do Not 

Pay system a requirement that Social Security increase the frequency of access to the Death Master File to daily, and identify improved methods for determining improper payments due to death 

of the recipient. 

Section 3355 includes requirements of IPERIA, which was in 31 

U.S.C. 3301 note, that requires the Director of OMB to determine 

the rate of improper payments and to set targets for recovering improper payments. 

Section 3356 provides the Director of OMB the authority to modify and update any guidance required by the legislation. 

Section 3357 is the Fraud Reduction Data Analytics Act of 2015, 

with the only change to law being that OMB may update its guidance as needed. 

Section 3358 establishes a new working group that will enable 

Federal agencies to collaborate with each other and non-Federal 

partners, such as state governments. The purpose of this addition 

is to aide in developing strategies to address root causes and driving factors of improper payments, such as fraud and eligibility determinations in state-managed federal benefits programs. 

Section 3. Repeals 

This section repeals the existing improper payments statutes 

that are scattered throughout the U.S. Code, and within notes of 

the U.S. Code, that section 2 reconstitutes within a new Subchapter of Title 31, and makes necessary conforming edits. ReVerDate Sep 11 2014 04:50 May 09, 2019 Jkt 089010 PO 00000 Frm 00006 Fmt 6659 Sfmt 6602 E:\HR\OC\SR035.XXX SR035

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pealed statutes include the Improper Payments Information Act of 

2002, the Improper Payments Elimination and Recovery Act of 

2010, the Improper Payments Elimination and Recovery Improvement Act of 2012, and the Fraud Reduction and Data Analytics Act 

of 2015. 

V. EVALUATION OF REGULATORY IMPACT

Pursuant to the requirements of paragraph 11(b) of rule XXVI of 

the Standing Rules of the Senate, the Committee has considered 

the regulatory impact of this bill and determined that the bill will 

have no regulatory impact within the meaning of the rules. The 

Committee agrees with the Congressional Budget Office’s statement that the bill contains no intergovernmental or private-sector 

mandates as defined in the Unfunded Mandates Reform Act 

(UMRA) and would impose no costs on state, local, or tribal governments. 

VI. CONGRESSIONAL BUDGET OFFICE COST ESTIMATES

U.S. CONGRESS, 

CONGRESSIONAL BUDGET OFFICE, 

Washington, DC, April 22, 2019. 

Hon. RON JOHNSON, 

Chairman, Committee on Homeland Security and Governmental Affairs, U.S. Senate, Washington, DC. 

DEAR MR. CHAIRMAN: The Congressional Budget Office has prepared the enclosed cost estimate for S. 375, the Payment Integrity 

Information Act of 2019. 

If you wish further details on this estimate, we will be pleased 

to provide them. The CBO staff contact is Matthew Pickford. 

Sincerely, 

KEITH HALL, 

Director. 

Enclosure. 


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1Sec. 2(f)(2) of the Improper Payments Elimination and Recovery Act of 2010, Public Law 

111–204. 2 Common reasons for improper payments are described at Performance.gov. ‘‘Payment Accuracy: Frequently Asked Questions’’ (accessed December 19, 2018), https://paymentaccuracy.gov/ 

faq. 

The bill would 

• Direct federal agencies to undertake numerous activities 

designed to reduce improper payments 

Estimated budgetary effects would primarily stem from 

• Potential administrative activities of federal employees 

• Audits of selected programs or activities 

Areas of significant uncertainty include 

• How this legislation would build on and interact with current law, policy, and practice of the federal government 

• Effectiveness of potential new program integrity initiatives 

Bill summary 

S. 375 would direct federal agencies to undertake numerous activities designed to reduce improper payments. Specifically, agencies would be required to identify and report annually on programs 

that are susceptible to improper payments. Agencies also would 

need to estimate the magnitude of improper payments and report 

to their inspectors general and the OMB Director on progress. S. 

375 also would require agencies to implement recovery audits if 

they would be cost-effective for any program or activity that spends 

more than $1 million annually. 

Estimated federal cost 

Enacting S. 375 could affect direct spending and revenues; therefore, pay-as-you-go procedures apply. However, CBO cannot estimate the magnitude or the direction of those effects. S. 375 also 

could affect spending subject to appropriation, but CBO also cannot 

determine the potential change in discretionary spending that 

would result from implementing the bill. 

Background and current law 

Within government programs, an improper payment is generally 

defined as ‘‘any payment that should not have been made or that 

was made in an incorrect amount under statutory, contractual, administrative, or other legally applicable requirements. In addition, 

improper payments include payments with insufficient documentation to determine if the payment was proper.’’ 1 Effectively, improper payments include fraud, payments that arise from paperwork errors (such as accidental transposition of numbers in a 

form), and from design elements that make the program susceptible to improper payments.2

Over the past two decades, many laws have been enacted to curtail improper payments, including the Improper Payments Information Act of 2002, the Improper Payments Elimination and Recovery 

Act of 2010, the Improper Payments Elimination and Recovery Improvement Act of 2012, and the Fraud Reduction and Data Analytics Act of 2015. 

According to guidance from the Office of Management and Budget (OMB), federal agencies already must estimate the magnitude of 

improper payments for many programs, even though it can be difVerDate Sep 11 2014 04:50 May 09, 2019 Jkt 089010 PO 00000 Frm 00008 Fmt 6659 Sfmt 6602 E:\HR\OC\SR035.XXX SR035

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3 Acceptable statistical sampling methods are described in Office of Management and Budget, 

Requirements for Payment Integrity Improvement, Circular A–123, Appendix C (June 2018), 

https://go.usa.gov/xExQG. (PDF, 2.3 MB). 4Government Accountability Office, ‘‘High Risk List’’ (accessed December 19, 2018) 

www.gao.gov/highrisk/overview. 5For more information on the CMS RAC program, see Centers for Medicare & Medicaid Services, ‘‘Medicare Fee for Service Recovery Audit Program: ‘‘Resources’’ (September 18, 2018) 

https://go.usa.gov/xExQ6. 

ficult.3 In addition, the Government Accountability Office (GAO), 

maintains a list of programs at high risk for improper payments.4

Basis of estimate 

Under recovery audits, third-party contractors identify overpayments and underpayments in federal programs. Those contractors 

may be paid from contingency fees where the contractor receives a 

percentage of any identified improper payments, or compensated 

using a set fee. 

For example, the Centers for Medicare & Medicaid Services 

(CMS) currently conducts recovery audits for Medicare’s fee-forservice program. Contractors are paid on a contingency basis, generally between 9 percent and 12 percent of the improper payments 

they identify. Over fiscal years 2013 through 2016, the current 

Medicare recovery audit contractor (RAC) program returned approximately $5 billion to the Medicare Trust Funds—about 0.2 percent of Medicare spending for that same period.5

Although recovery audits could be used effectively to identify underpayments and to recover overpayments in other programs, CBO 

cannot estimate the budgetary effects of this provision for several 

reasons: • Information about the number of agencies that might use 

recovery audits under S. 375 and the amount of federal spending or collections that might result is difficult to find. Agencies 

can use such audits under current law; their failure to do so 

might indicate that they do not expect the use of contract auditors to be useful or cost-effective. • The bill’s standard for cost-effectiveness of recovery audits 

would depend, in part, on how agencies structured payments 

to contractors. As a result, estimating the net budgetary effect 

of recovery audits or their budgetary effects is difficult. • For programs that receive annual appropriations, recovering overpayments might not result in net savings, especially 

if agencies could spend the recovered funds without subsequent 

appropriation action. Future appropriations would need to be 

reduced to realize any reduction in spending. 

In addition, CBO cannot determine whether CMS would be able 

to continue to operate its current RAC program, which differs from 

the program outlined in the bill in several aspects. If the program 

changed to meet the requirements of S. 375, Medicare recoveries of 

improper payments could be larger or smaller than under CBO’s 

current baseline projections. CBO cannot estimate the direction or 

magnitude of those effects on direct spending. 

Finally, the bill also would require federal agencies to undertake 

several new or modified activities that CBO expects could require 

new administrative resources. Because such spending is generally 

subject to appropriation, S. 375 would increase the amount of discretionary funding that agencies require. However, CBO cannot deVerDate Sep 11 2014 04:50 May 09, 2019 Jkt 089010 PO 00000 Frm 00009 Fmt 6659 Sfmt 6602 E:\HR\OC\SR035.XXX SR035

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termine how the bill might affect such spending. Agencies could redirect current spending on activities designed to reduce improper 

payments to fulfill the requirements of S. 375 but those resources 

might not be sufficient to meet the bill’s requirements. 

Uncertainty 

CBO cannot determine whether the activities mandated by section (a), Identification of Susceptible Programs and Activities, or 

section (b), Improving the Determination of Improper Payments, 

would materially affect the ability of federal agencies to identify, 

prevent, and recover improper payments relative to what they can 

already do. For example, as noted above, GAO already identifies 

high-risk programs but how the identification mandated by S. 375 

would differ from GAO’s is unclear. Similarly, agencies are now required to identify improper payments within the programs they administer and CBO cannot determine whether the changes mandated by S. 375 would improve on current processes. Because of 

those uncertanities CBO cannot determine how federal spending 

might change if the activities required under S. 375 were implemented. 

Increasing the number of employees focused on preventing and 

recovering such payments could reduce improper payments. Using 

information from the Office of Personnel Management, CBO estimates that approximately 81,500 current federal workers engage in 

activities related to obligating, apportioning, or otherwise managing federal funds. Based on average salary and benefits, CBO estimates that compensation for those workers totals more than $8 

billion annually. If the number of staff devoted to preventing improper payments were increased by 1 percent (about 30 employees) 

costs would increase by more than $80 million annually, assuming 

appropriation of the estimated amounts. Likewise, a 5 percent increase in staffing would cost more than $400 million annually and 

add more than 4,000 new employees throughout the government. 

However, S. 375 would neither authorize nor appropriate funding 

for agencies to hire additional personnel. Without knowing how 

many staff might be hired to implement the legislation, CBO cannot estimate how the number or magnitude of improper payments 

that might be affected. 

Pay-As-You-Go considerations 

The Statutory Pay-As-You-Go Act of 2010 establishes budget-reporting and enforcement procedures for legislation affecting direct 

spending or revenues. Enacting S. 375 could affect direct spending; 

therefore, pay-as-you-go procedures apply. However, CBO cannot 

estimate the magnitude or the direction of those effects. 

Increase in long-term deficits 

Although CBO cannot determine the effects of S. 375, enacting 

the bill probably would not increase net direct spending or on-budget deficits in any of the four consecutive 10-year periods beginning 

in 2030. 

Mandates: None. 

Estimate prepared by: Federal Costs: Mathew Pickford, Lara 

Robillard, and David Hughes; Mandates: Andrew Laughlin. 


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Estimate reviewed by: Tom Bradley, Chief, Health Systems and 

Medicare Cost Estimates Unit; Kim Cawley, Chief, Natural and 

Physical Resources Cost Estimates; H. Samuel Papenfuss, Deputy 

Assistant Director for Budget Analysis; Theresa Gullo, Assistant 

Director for Budget Analysis. 

VII. CHANGES IN EXISTING LAW MADE BY THE BILL, AS REPORTED

In compliance with paragraph 12 of rule XXVI of the Standing 

Rules of the Senate, changes in existing law made by the bill, as 

reported, are shown as follows: (existing law proposed to be omitted 

is enclosed in brackets, new matter is printed in italic, and existing 

law in which no change is proposed is shown in roman): 

UNITED STATES CODE 

* * * * * * * 

TITLE 5—GOVERNMENT ORGANIZATION AND 

EMPLOYEES 

* * * * * * * 

CHAPTER 57—TRAVEL, TRANSPORTATION, AND 

SUBSISTENCE 

* * * * * * * 

Subchapter I—Travel and Subsistence Expenses; Milage 

Allowances 

* * * * * * * 

SECTION 5701. DEFINITIONS 

* * * * * * * 

HISTORICAL AND REVISION NOTES 

* * * * * * * 

CONSTRUCTION 

* * * * * * * 

(a) EXECUTIVE AGENCY ACCOUNTING.—Nothing in this Act øsee 

Short Title of 2012 Amendment note set out under section 101 of 

Title 41, Public Contracts¿, or the amendments made by this Act, 

shall be construed to excuse the head of an executive agency from 

the responsibilities set out in øsection 3512 of title 31, United 

States Code, or in the Improper Payments Information Act of 2002 

øPub. L. 107–300¿ (31 U.S.C. 3321 note)¿ section 3512 or subchapter IV of chapter 33 of title 31, United States Code. 

* * * * * * * 

TITLE 6—DOMESTIC SECURITY 

* * * * * * * 


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CHAPTER 1—HOMELAND SECURITY ORGANIZATION 

* * * * * * * 

Subchapter XV-Homeland Security Grants 

* * * * * * * 

PART B—GRANTS ADMINISTRATION 

* * * * * * * 

SEC. 612. ACCOUNTABILITY 

(a) AUDITS OF GRANT PROGRAMS.— (1) COMPLIANCE REQUIREMENTS.— (A) * * * 

(B) * * * 

(C) IMPROPER PAYMENTS.—øConsistent with the Improper Payments Information Act of 2002 (31 U.S.C. 3321 

note)¿Consistent with subchapter IV of chapter 33 or title 

31, United States Code, for each of the grant programs 

under sections 604 and 605 of this title and section 762 of 

this title, the Administrator shall specify policies and procedures for— 

(i) identifying activities funded under any such 

grant program that are susceptible to significant improper payments; and 

(ii) reporting any improper payments to the Department. 

* * * * * * * 

(5) RECOVERY AUDITS.—The Administrator shall conduct a 

recovery audit under øsection 2(h) of the Improper Payments 

Elimination and Recovery Act of 2010 (31 U.S.C. 3321 note)¿ 

section 3352(i) of title 31, United States Code for any grant administered by the Department with a total value of not less 

than $1,000,000, if the Administrator finds that— 

(A) a financial audit has identified improper payments 

that can be recouped; and 

(B) it is cost effective to conduct a recovery audit to recapture the targeted funds. 

* * * * * * * 

TITLE 31—MONEY AND FINANCE 

* * * * * * * 

Subtitle III—Financial Management 

* * * * * * * 

CHAPTER 33—DEPOSITING, KEEPING, AND PAYING 

MONEY 

Table of Sections 

SUBCHAPTER I—DEPOSITS AND DEPOSITARIES

* * * * * * * 

SUBCHAPTER IV.—IMPROPER PAYMENTS. 


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Sec. 

3351. Definitions. 

3352. Estimates of improper payments and reports on actions to reduce improper 

payments. 

3353. Compliance. 

3354. Do Not Pay Initiative. 

3355. Improving recovery of improper payments. 

3356. Improving the use of data by executive agencies for curbing improper payments. 

3357. Financial and administrative controls relating to fraud and improper payments. 

3358. Interagency working group for Governmentwide payment integrity improvement. 

* * * * * * * 

Subchapter II—Payments 

* * * * * * * 

§ 3321. Disbursing authority in the executive branch 

* * * * * * * 

øFraud Reduction and Data Analytics¿ 

øIMPROPER PAYMENTS ELIMINATION AND RECOVERY 

IMPROVEMENT¿ 

øIMPROPER PAYMENTS¿ 

Subchapter IV—Improper Payments 

SEC. 3351. DEFINITIONS. 

In this subchapter: 

(1) ANNUAL FINANCIAL STATEMENT.—The term ‘‘annual financial statement’’ means the annual financial statement required 

under section 3515 of this title or similar provision of law. 

(2) COMPLIANCE.—The term ‘‘compliance’’ means that an executive agency— 

(A) has— 

(i) published improper payments information with 

the annual financial statement of the executive agency 

for the most recent fiscal year; and 

(ii) posted on the website of the executive agency that 

statement and any accompanying materials required 

under guidance of the Office of Management and 

Budget; 

(B) if required, has conducted a program specific risk assessment for each program or activity that conforms with 

the requirements under section 3352(a); 

(C) if required, publishes improper payments estimates 

for all programs and activities identified under section 

3352(a) in the accompanying materials to the annual financial statement; 

(D) publishes programmatic corrective action plans prepared under section 3352(d) that the executive agency may 

have in the accompanying materials to the annual financial statement; 


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(E) publishes improper payments reduction targets established under section 3352(d) that the executive agency may 

have in the accompanying materials to the annual financial statement for each program or activity assessed to be 

at risk, and has demonstrated improvements and developed 

a plan to meet the reduction targets; and 

(F) has reported an improper payment rate of less than 

10 percent for each program and activity for which an estimate was published under section 3352(c). 

(3) DO NOT PAY INITIATIVE.—The term ‘‘Do Not Pay Initiative’’ 

means the initiative described in section 3354(b). 

(4) IMPROPER PAYMENT.—The term ‘‘improper payment’’— 

(A) means any payment that should not have been made 

or that was made in an incorrect amount, including an 

overpayment or underpayment, under a statutory, contractual, administrative, or other legally applicable requirement; and 

(B) includes— 

(i) any payment to an ineligible recipient; 

(ii) any payment for an ineligible good or service; 

(iii) any duplicative payment; 

(iv) any payment for a good or service not received, 

except for those payments where authorized by law; 

and 

(v) any payment that does not account for credit for 

applicable discounts. 

(5) PAYMENT.—The term ‘‘payment’’ means any transfer 

or commitment for future transfer of Federal funds such as 

cash, securities, loans, loan guarantees, and insurance subsidies to any non-Federal person or entity or a Federal employee, that is made by a Federal agency, a Federal contractor, a Federal grantee, or a governmental or other organization administering a Federal program or activity. 

(6) PAYMENT FOR AN INELIGIBLE GOOD OR SERVICE.—The 

term ‘‘payment for an ineligible good or service’’ includes a 

payment for any good or service that is rejected under any 

provision of any contract, grant, lease, cooperative agreement, or other funding mechanism. 

(7) RECOVERY AUDIT.—The term ‘‘recovery audit’’ means 

a recovery audit described in section 3352(i). 

(8) STATE.—The term ‘‘State’’ means each State of the 

United States, the District of Columbia, each territory or 

possession of the United States, and each Federally recognized Indian tribe. 

SEC. 3352. ESTIMATES OF IMPROPER PAYMENTS AND REPORTS ON ACTIONS TO REDUCE IMPROPER PAYMENTS. 

(a) IDENTIFICATION OF SUSCEPTIBLE PROGRAMS AND ACTIVITIES.— 

(1) IN GENERAL.—The head of each executive agency shall, in 

accordance with guidance prescribed by the Director of the Office of Management and Budget— 

(A) periodically review all programs and activities that 

the head of the executive agency administers; and 

(B) identify all programs and activities with outlays exceeding the statutory threshold dollar amount described in 


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paragraph (3)(A)(i) that may be susceptible to significant 

improper payments. 

(2) FREQUENCY.—A review under paragraph (1) shall be performed for each program and activity that the head of an executive agency administers not less frequently than once every 3 fiscal years. 

(3) RISK ASSESSMENTS.— (A) DEFINITION OF SIGNIFICANT.—In this paragraph, the 

term ‘‘significant’’ means that, in the preceding fiscal year, 

the sum of a program or activity’s improper payments and 

payments whose propriety cannot be determined by the executive agency due to lacking or insufficient documentation 

may have exceeded— (i) $10,000,000 of all reported program or activity 

payments of the executive agency made during that fiscal year and 1.5 percent of program outlays; or (ii) $100,000,000. 

(B) SCOPE.—In conducting a review under paragraph (1), 

the head of each executive agency shall take into account 

those risk factors that are likely to contribute to a susceptibility to significant improper payments, such as— 

(i) whether the program or activity reviewed is new 

to the executive agency; 

(ii) the complexity of the program or activity reviewed; 

(iii) the volume of payments made through the program or activity reviewed; 

(iv) whether payments or payment eligibility decisions are made outside of the executive agency, such as 

by a State or local government; 

(v) recent major changes in program funding, authorities, practices, or procedures; 

(vi) the level, experience, and quality of training for 

personnel responsible for making program eligibility 

determinations or certifying that payments are accurate; 

(vii) significant deficiencies in the audit report of the 

executive agency or other relevant management findings that might hinder accurate payment certification; 

(viii) similarities to other programs or activities that 

have reported improper payment estimates or been 

deemed susceptible to significant improper payments; 

(ix) the accuracy and reliability of improper payment 

estimates previously reported for the program or activity, or other indicator of potential susceptibility to improper payments identified by the Inspector General of 

the executive agency, the Government Accountability 

Office, other audits performed by or on behalf of the 

Federal, State, or local government, disclosures by the 

executive agency, or any other means; 

(x) whether the program or activity lacks information 

or data systems to confirm eligibility or provide for 

other payment integrity needs; and 

(xi) the risk of fraud as assessed by the executive 

agency under the Standards for Internal Control in the 


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Federal Government published by the Government Accountability Office (commonly known as the ‘Green 

Book’). 

(C) ANNUAL REPORT.—Each executive agency shall publish an annual report that includes— 

(i) a listing of each program or activity identified 

under paragraph (1), including the date on which the 

program or activity was most recently assessed for risk 

under paragraph (1); and 

(ii) a listing of any program or activity for which the 

executive agency makes any substantial changes to the 

methodologies of the reviews conducted under paragraph (1). 

(b) IMPROVING THE DETERMINATION OF IMPROPER PAYMENTS.— 

(1) IN GENERAL.—The Director of the Office of Management 

and Budget shall on an annual basis— 

(A) identify a list of high-priority Federal programs for 

greater levels of oversight and review— 

(i) in which the highest dollar value or highest rate 

of improper payments occur; or 

(ii) for which there is a higher risk of improper payments; and 

(B) in coordination with the executive agency responsible 

for administering a high-priority program identified under 

subparagraph (A), establish annual targets and semi-annual or quarterly actions for reducing improper payments 

associated with the high-priority program. 

(2) REPORT ON HIGH-PRIORITY IMPROPER PAYMENTS.— 

(A) IN GENERAL.—Subject to Federal privacy policies and 

to the extent permitted by law, each executive agency with 

a program identified under paragraph (1)(A) shall on an 

annual basis submit to the Inspector General of the executive agency and the Office of Management and Budget, and 

make available to the public, including through a website, 

a report on that program. 

(B) CONTENTS.—Each report submitted under subparagraph (A)— 

(i) shall describe any action the executive agency— 

(I) has taken or plans to take to recover improper 

payments, and 

(II) intends to take to prevent future improper 

payments; and 

(ii) shall not include— 

(I) any referrals the executive agency made or 

anticipates making to the Department of Justice; 

or 

(II) any information provided in connection with 

a referral described in subclause (I). 

(C) PUBLIC AVAILABILITY ON CENTRAL WEBSITE.—The Office of Management and Budget shall make each report 

submitted under subparagraph (A) available on a central 

website. 

(D) AVAILABILITY OF INFORMATION TO INSPECTOR GENERAL.—Subparagraph (B)(ii) shall not prohibit any referral 


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or information being made available to an Inspector General as otherwise provided by law. 

(E) ASSESSMENT AND RECOMMENDATION.—The Inspector 

General of each executive agency that submits a report 

under subparagraph (A) shall, for each program of the executive agency, that is identified under paragraph (1)(A)— 

(i) review— 

(I) the assessment of the level of risk associated 

with the program and the quality of the improper 

payment estimates and methodology of the executive agency relating to the program; and 

(II) the oversight or financial controls to identify 

and prevent improper payments under the program; and 

(ii) submit to the appropriate authorizing and appropriations committees of Congress recommendations, 

which may be included in another report submitted by 

the Inspector General to Congress, for modifying any 

plans of the executive agency relating to the program, 

including improvements for improper payments determination and estimation methodology. 

(F) ANNUAL MEETING.—Not less frequently than once 

every year, the head of each executive agency with a program identified under paragraph (1)(A), or a designee of 

the head of the executive agency, shall meet with the Director of the Office of Management and Budget, or a designee 

of the Director, to report on actions taken during the preceding year and planned actions to prevent improper payments. 

(c) ESTIMATION OF IMPROPER PAYMENTS.— (1) ESTIMATION.—With respect to each program and activity 

identified under subsection (a)(1), the head of the relevant executive agency shall— 

(A) produce a statistically valid estimate, or an estimate 

that is otherwise appropriate using a methodology approved by the Director of the Office of Management and 

Budget, of the improper payments made by the program or 

activity; and 

(B) include the estimates described in subparagraph (A) 

in the accompanying materials to the annual financial 

statement of the executive agency and as required in applicable guidance of the Office of Management and Budget. 

(2) LACKING OR INSUFFICIENT DOCUMENTATION.— 

(A) IN GENERAL.—For the purpose of producing an estimate under paragraph (1), when the executive agency cannot determine, due to lacking or insufficient documentation, 

whether a payment is proper or not, the payment shall be 

treated as an improper payment. 

(B) SEPARATE REPORT.—The head of an executive agency 

may report separately on what portion of the improper payments estimate for a program or activity of the executive 

agency under paragraph (1) is attributable to lacking or insufficient documentation. 

(d) REPORTS ON ACTIONS TO REDUCE IMPROPER PAYMENTS.— 

With respect to any program or activity of an executive agency with 


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estimated improper payments under subsection (c), the head of the 

executive agency shall provide with the estimate required under subsection (c) a report on what actions the executive agency is taking 

to reduce improper payments, including— 

(1) a description of the causes of the improper payments, actions planned or taken to correct those causes, and the planned 

or actual completion date of the actions taken to address those 

causes; 

(2) in order to reduce improper payments to a level below 

which further expenditures to reduce improper payments would 

cost more than the amount those expenditures would save in 

prevented or recovered improper payments, a statement of 

whether the executive agency has what is needed with respect 

to— 

(A) internal controls; 

(B) human capital; 

(C) information systems and other infrastructure; 

(3) if the executive agency does not have sufficient resources 

to establish and maintain effective internal controls as described in paragraph (2)(A), a description of the resources the 

executive agency has requested in the budget submission of the 

executive agency to establish and maintain those internal controls; 

(4) program-specific and activity-specific improper payments 

reduction targets that have been approved by the Director of the 

Office of Management and Budget; 

(5) a description of the steps the executive agency has taken 

to ensure that executive agency managers, programs, and, 

where appropriate, States and local governments are held accountable through annual performance appraisal criteria for— 

(A) meeting applicable improper payment reduction targets; and 

(B) establishing and maintaining sufficient internal controls, including an appropriate control environment, that 

effectively— 

(i) prevent improper payments from being made; and 

(ii) promptly detect and recover improper payments 

that are made; and 

(6) a description of how the level of planned or completed 

actions by the executive agency to address the causes of the 

improper payments matches the level of improper payments, including a breakdown by category of improper payments and specific timelines for completion of those actions. 

(e) REPORTS ON ACTIONS TO RECOVER IMPROPER PAYMENTS.— 

With respect to improper payments identified in a recovery audit, 

the head of the executive agency shall provide with the estimate required under subsection (c) a report on all actions the executive 

agency is taking to recover the improper payments, including— 

(1) a discussion of the methods used by the executive agency 

to recover improper payments; 

(2) the amounts recovered, outstanding, and determined to 

not be collectable, including the percent those amounts represent of the total improper payments of the executive agency; 


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(3) if a determination has been made that certain improper 

payments are not collectable, a justification of that determination; 

(4) an aging schedule of the amounts outstanding; 

(5) a summary of how recovered amounts have been disposed 

of; 

(6) a discussion of any conditions giving rise to improper payments and how those conditions are being resolved; and 

(7) if the executive agency has determined under subsection (i) 

that performing recovery audits for any applicable program or 

activity is not cost-effective, a justification for that determination. 

(f) GOVERNMENTWIDE REPORTING OF IMPROPER PAYMENTS AND

ACTIONS TO RECOVER IMPROPER PAYMENTS.— (1) REPORT.—Each fiscal year, the Director of the Office of 

Management and Budget shall submit a report with respect to 

the preceding fiscal year on actions that executive agencies have 

taken to report information regarding improper payments and 

actions to recover overpayments to— 

(A) the Committee on Homeland Security and Governmental Affairs of the Senate; 

(B) the Committee on Oversight and Reform of the House 

of Representatives; and 

(C) the Comptroller General of the United States. 

(2) CONTENTS.—Each report required under paragraph (1) 

shall include— 

(A) a summary of the reports of each executive agency on 

improper payments and recovery actions submitted under 

this section; 

(B) an identification of the compliance status of each executive agency, as determined by the Inspector General of 

the executive agency under section 3353, to which this section applies; 

(C) Governmentwide improper payment reduction targets; 

(D) a Governmentwide estimate of improper payments; 

and 

(E) a discussion of progress made towards meeting Governmentwide improper payment reduction targets. 

(g) GUIDANCE BY THE OFFICE OF MANAGEMENT AND BUDGET.— (1) IN GENERAL.—Not later than 1 year after the date of enactment of this section, the Director of the Office of Management and Budget shall prescribe guidance for executive agencies 

to implement the requirements of this section, which shall not 

include any exemptions to those requirements that are not specifically authorized by this section. 

(2) CONTENTS.—The guidance under paragraph (1) shall prescribe— 

(A) the form of the reports on actions to reduce improper 

payments, recovery actions, and Governmentwide reporting; 

and 

(B) strategies for addressing risks and establishing appropriate prepayment and postpayment internal controls. 

(h) DETERMINATIONS OF AGENCY READINESS FOR OPINION ON IN- TERNAL CONTROL.—The criteria required to be developed under section 2(g) of the Improper Payments Elimination and Recovery Act 


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of 2010, as in effect on the day before the date of enactment of this 

section— 

(1) shall continue to be in effect on and after the date of enactment of this section; and 

(2) may be modified as determined appropriate by the Director of the Office of Management and Budget. 

(i) RECOVERY AUDITS.— 

(1) IN GENERAL.— 

(A) CONDUCT OF AUDITS.—Except as provided under 

paragraph (3) and if not prohibited under any other provision of law, the head of each executive agency shall conduct 

recovery audits with respect to each program and activity 

of the executive agency that expends $1,000,000 or more annually if conducting the audits would be cost effective. 

(B) PROCEDURES.—In conducting a recovery audit under 

this subsection, the head of an executive agency— 

(i) shall give priority to the most recent payments 

and to payments made in any program identified as 

susceptible to significant improper payments under 

subsection (a); 

(ii) shall implement this subsection in a manner designed to ensure the greatest financial benefit to the 

Federal Government; and 

(iii) may conduct the recovery audit directly, by using 

other departments and agencies of the United States, 

or by producing performance of recovery audits by private sector sources by contract, subject to the availability of appropriations, or by any combination thereof. 

(C) RECOVERY AUDIT CONTRACTS.—With respect to a recovery audit procured by an executive agency by contract— 

(i) subject to subparagraph (B)(iii), and except to the 

extent such actions are outside the authority of the executive agency under section 7103 of title 41, the head 

of the executive agency may authorize the contractor 

to— 

(I) notify entities, including individuals, of potential overpayments made to those entities; 

(II) respond to questions concerning potential 

overpayments; and 

(III) take other administrative actions with respect to an overpayment claim made or to be made 

by the executive agency; and 

(ii) the contractor shall not have the authority to 

make a final determination relating to whether any 

overpayment occurred or whether to compromise, settle, 

or terminate an overpayment claim. 

(D) CONTRACT TERMS AND CONDITIONS.— 

(i) IN GENERAL.—The executive agency shall include 

in each contract for procurement of performance of a 

recovery audit a requirement that the contractor 

shall— 

(I) provide to the executive agency periodic reports on conditions giving rise to overpayments 


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identified by the contractor and any recommendations on how to mitigate those conditions; 

(II) notify the executive agency of any overpayments identified by the contractor pertaining to the 

executive agency or to any other executive agency 

that are beyond the scope of the contract; and 

(III) report to the executive agency credible evidence of fraud or vulnerabilities to fraud and conduct appropriate training of personnel of the contractor on identification of fraud. 

(ii) REPORTS ON ACTION TAKEN.—Each executive 

agency shall, on an annual basis, include in annual financial statement of the executive agency a report on 

actions taken by the executive agency during the preceding fiscal year to address the recommendations described in clause (i)(I). 

(E) AGENCY ACTION FOLLOWING NOTIFICATION.—Each executive agency shall— 

(i) take prompt and appropriate action in response to 

a report or notification by a contractor under subclause 

(I) or (II) of subparagraph (D)(i) to collect an overpayment; and 

(ii) forward to other executive agencies any information that applies to that executive agency. 

(2) DISPOSITION OF AMOUNTS RECOVERED.— 

(A) In GENERAL.—Amounts collected by executive agencies 

each fiscal year through recovery audits shall be treated in 

accordance with this paragraph. 

(B) DISTRIBUTION.—The head of an executive agency 

shall determine the distribution of collected amounts described in subparagraph (A), less amounts needed to fulfill 

the purposes of section 3562(a) of this title, in accordance 

with subparagraphs (C), (D), and (E). 

(C) USE FOR FINANCIAL MANAGEMENT IMPROVEMENT PROGRAM.—Not more than 25 percent of the amounts collected 

by an executive agency through recovery audits— 

(i) shall be available to the head of the executive 

agency to carry out the financial management improvement program of the executive agency under paragraph 

(3); 

(ii) may be credited, if applicable, for the purpose described in clause (i) by the head of an executive agency 

to any executive agency appropriations and funds that 

are available for obligation at the time of collection; 

and 

(iii) shall be used to supplement and not supplant 

any other amounts available for the purpose described 

in clause (i) and shall remain available until expended. 

(D) USE FOR ORIGINAL PURPOSE.—Not more than 25 percent of the amounts collected by an executive agency 

through recovery audits— 

(i) shall be credited to the appropriation or fund, if 

any, available for obligation at the time of collection 


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for the same general purposes as the appropriation or 

fund from which the overpayment was made; 

(ii) shall remain available for the same period and 

purposes as the appropriation or fund to which credited; and 

(iii) if the appropriation from which an overpayment 

was made has expired— 

(I) in the case of recoveries of overpayments that 

are made from a trust or special fund account, 

shall revert to that account; and 

(II) in the case of other recoveries of overpayments— 

(aa) for amounts that are recovered more 

than 5 fiscal years from the last fiscal year in 

which the funds were available for obligation, 

shall be deposited in the Treasury as miscellaneous receipts; and 

(bb) for other amounts, shall be newly available for the same time period as the funds 

were originally available for obligation. 

(E) USE FOR INSPECTOR GENERAL ACTIVITIES.—Not more 

than 5 percent of the amounts collected by an executive 

agency through recovery audits— 

(i) shall be available to the Inspector General of that 

executive agency for— 

(I) the Inspector General to carry out this Act; or 

(II) any other activities of the Inspector General 

relating to investigating improper payments or auditing internal controls associated with payments; 

and 

(ii) shall remain available for the same period and 

purposes as the appropriation or fund to which credited. 

(F) REMAINDER.—Amounts collected that are not applied 

in accordance with subparagraph (B), (C), (D), or (E) shall 

be deposited in the Treasury as miscellaneous receipts, except that in the case of recoveries of overpayments that are 

made from trust or special fund accounts, those amounts 

shall revert to those accounts. 

(G) DISCRETIONARY AMOUNTS.—This paragraph shall 

apply only to recoveries of overpayments that are made 

from discretionary appropriations, as defined in section 

250(c)(7) of the Balanced Budget and Emergency Deficit 

Control Act of 1985 (2 U.S.C. 900(c)(7)), and shall not 

apply to recoveries of overpayments that are made from discretionary amounts that were appropriated before the date 

of enactment of the Improper Payments Elimination and 

Recovery Act of 2010, as in effect on the day before the date 

of enactment of this section. 

(H) APPLICATION.—This paragraph shall not apply to the 

recovery of an overpayment if the appropriation from which 

the overpayment was made has not expired. 

(3) FINANCIAL MANAGEMENT IMPROVEMENT PROGRAM.— 

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gram consistent with rules prescribed by the Director of the 

Office of Management and Budget. 

(B) PROGRAM FEATURES.—In conducting a program described in subparagraph (A), the head of an executive agency— 

(i) shall, as the first priority of the program, address 

problems that contribute directly to executive agency 

improper payments; and 

(ii) may seek to reduce errors and waste in other executive agency programs and operations. 

(4) PRIVACY PROTECTIONS.—Any nongovernmental entity that, 

in the course of recovery auditing or recovery activity under this 

subsection, obtains information that identifies an individual or 

with respect to which there is a reasonable basis to believe that 

the information can be used to identify an individual, may not 

disclose the information for any purpose other than the recovery 

auditing or recovery activity and governmental oversight of the 

activity, unless disclosure for that other purpose is authorized 

by the individual to the executive agency that contracted for the 

performance of the recovery auditing or recovery activity. 

(5) RULE OF CONSTRUCTION.—Except as provided under paragraph (4), nothing in this subsection shall be construed as terminating or in any way limiting authorities that are otherwise 

available to executive agencies under existing provisions of law 

to recover improper payments and use recovered amounts. 

SEC. 3353. COMPLIANCE. 

(a) ANNUAL COMPLIANCE REPORT BY INSPECTOR GENERAL OF EXECUTIVE AGENCIES.— 

(1) IN GENERAL.—Each fiscal year, the Inspector General of 

each executive agency shall— 

(A) determine whether the executive agency is in compliance; and 

(B) submit a report on the determination made under 

subparagraph (A) to— 

(i) the head of the executive agency; 

(ii) the Committee on Homeland Security and Governmental Affairs of the Senate; 

(iii) the Committee on Oversight and Reform of the 

House of Representatives; and 

(iv) the Comptroller General of the United States. 

(2) DEVELOPMENT OR USE OF A CENTRAL WEBSITE.—The 

Council of the Inspectors General on Integrity and Efficiency (in 

this subsection referred to as the ‘Council’) shall develop a public central website, or make use of a public central website in 

existence on the date of enactment of this section, to contain individual compliance determination reports issued by Inspectors 

General under paragraph (1)(B) and such additional information as determined by the Council. 

(3) OMB GUIDANCE.—Not later than 180 days after the date 

of enactment of this section, the Director of the Office of Management and Budget, in consultation with the Council and with 

consideration given to the available resources and independence 

of individual Offices of Inspectors General, shall develop and 

promulgate guidance for the compliance determination reports 


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issued by the Inspectors General under paragraph (1)(B), which 

shall require that— 

(A) the reporting format used by the Inspectors General 

is consistent; 

(B) Inspectors General evaluate and take into account the 

adequacy of executive agency risk assessments, improper 

payment estimates methodology, and executive agency action plans to address the causes of improper payments; 

(C) Inspectors General take into account whether the executive agency has correctly identified the causes of improper payments and whether the actions of the executive 

agency to address those causes are adequate and effective; 

(D) Inspectors General evaluate the adequacy of executive 

agency action plans on how the executive agency addresses 

the causes of improper payments; and 

(E) as part of the report, Inspectors General include an 

evaluation of executive agency efforts to prevent and reduce 

improper payments and any recommendations for actions 

to further improve that prevention and reduction. 

(4) CIGIE GUIDANCE.—Not later than 180 days after the date 

of enactment of this section, the Council shall, with consideration given to the available resources and independence of individual Offices of Inspectors General, develop and promulgate 

guidance that specifies procedures for compliance determinations made by the Inspectors General under paragraph (1)(A), 

which shall describe procedures for Inspectors General— 

(A) to make the determinations consistent regarding compliance; and 

(B) to evaluate— 

(i) for compliance with the requirement described in 

section 3351(2)(B), the risk assessment methodology of 

the executive agency, including whether the audits, examinations, and legal actions of the Inspector General 

indicate a higher risk of improper payments or actual 

improper payments that were not included in the risk 

assessments of the executive agency conducted under 

section 3352(a); 

(ii) for compliance with the requirement described in 

section 3351(2)(C), the accuracy of the rate estimates 

and whether the sampling and estimation plan used is 

appropriate given program characteristics; 

(iii) for compliance with the requirement described in 

section 3351(2)(D), the corrective action plans and 

whether the plans are adequate and focused on the true 

causes of improper payments, including whether the 

corrective action plans are— 

(I) reducing improper payments; 

(II) effectively implemented; and 

(III) prioritized within the executive agency; 

(iv) the adequacy of executive agency action plans to 

address the causes of improper payments; 

(v) executive agency efforts to prevent and reduce improper payments, and any recommendations for actions 

to further improve; and 


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(vi) whether an executive agency has published an 

annual financial statement in accordance with the requirement described in section 3351(2)(A). 

(b) REMEDIATION.— (1) NONCOMPLIANCE.— (A) IN GENERAL.—If an executive agency is determined by 

the Inspector General of that executive agency not to be in 

compliance under subsection (a) in a fiscal year with respect to a program or activity, the head of the executive 

agency shall submit to the appropriate authorizing and appropriations committees of Congress a plan describing the 

actions that the executive agency will take to come into 

compliance. 

(B) PLAN.—The plan described in subparagraph (A) shall 

include— 

(i) measurable milestones to be accomplished in 

order to achieve compliance for each program or activity; 

(ii) the designation of a senior executive agency official who shall be accountable for the progress of the executive agency in coming into compliance for each program or activity; and 

(iii) the establishment of an accountability mechanism, such as a performance agreement, with appropriate incentives and consequences tied to the success of 

the official designated under clause (ii) in leading the 

efforts of the executive agency to come into compliance 

for each program or activity. 

(2) NONCOMPLIANCE FOR 2 FISCAL YEARS.— (A) IN GENERAL.—If an executive agency is determined by 

the Inspector General of that executive agency not to be in 

compliance under subsection (a) for 2 consecutive fiscal 

years for the same program or activity, the executive agency 

shall propose to the Director of the Office of Management 

and Budget additional program integrity proposals that 

would help the executive agency come into compliance. 

(B) ADDITIONAL FUNDING— (i) IN GENERAL.—If the Director of the Office of Management and Budget determines that additional funding would help an executive agency described in subparagraph (A) come into compliance, the head of the 

executive agency shall obligate additional funding, in 

an amount determined by the Director, to intensified 

compliance efforts. 

(ii) REPROGRAMMING OR TRANSFER AUTHORITY.—In 

providing additional funding under clause (i)— 

(I) the head of an executive agency shall use any 

reprogramming or transfer authority available to 

the executive agency; and 

(II) if after exercising the reprogramming or 

transfer authority described in subclause (I), additional funding is necessary to obligate the full level 

of funding determined by the Director of the Office 

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gress for additional reprogramming or transfer authority. 

(3) REAUTHORIZATION AND STATUTORY PROPOSALS.—If an executive agency is determined by the Inspector General of that 

executive agency not to be in compliance under subsection (a) 

for 3 consecutive fiscal years for the same program or activity, 

the head of the executive agency shall, not later than 30 days 

after the date of that determination, submit to the appropriate 

authorizing and appropriations committees of Congress and the 

Comptroller General of the United States— 

(A) (i) reauthorization proposals for each program or activity that has not been in compliance for 3 or more consecutive fiscal years; and 

(ii) proposed statutory changes necessary to bring the program or activity into compliance; or 

(B) if the head of the executive agency determines that 

clauses (i) and (ii) of subparagraph (A) will not bring the 

program or activity into compliance, a description of the actions that the executive agency is undertaking to bring the 

program or activity into compliance and a timeline of when 

the compliance will be achieved. 

(4) PLAN AND TIMELINE FOR COMPLIANCE.—If an executive 

agency is determined by the Inspector General of that executive 

agency not to be in compliance under subsection (a) for 4 or 

more consecutive fiscal years for the same program or activity, 

the head of the executive agency shall, not later than 30 days 

after such determination, submit to the appropriate authorizing 

and appropriations committees of Congress a report that includes— 

(A) the activities taken to comply with the requirements 

for 1, 2, 3, 4, or more years of noncompliance; 

(B) a description of any requirements that were fulfilled 

for 1, 2, or 3 consecutive years of noncompliance that are 

still relevant and being pursued as a means to bring the 

program or activity into compliance and prevent and reduce improper payments; 

(C) a description of any new corrective actions; and 

(D) a timeline for when the program or activity will 

achieve compliance based on the actions described within 

the report. 

(5) ANNUAL REPORT.—Each executive agency shall submit to 

the appropriate authorizing and appropriations committees of 

Congress and the Comptroller General of the United States— 

(A) a list of each program or activity that was determined 

to not be in compliance under paragraph (1), (2), (3), or (4); 

and 

(B) actions that are planned to bring the program or activity into compliance. 

(c) COMPLIANCE ENFORCEMENT PILOT PROGRAMS.—The Director 

of the Office of Management and Budget may establish 1 or more 

pilot programs that shall test potential accountability mechanisms 

with appropriate incentives and consequences tied to success in ensuring compliance with this section and eliminating improper payments. 


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(d) IMPROVED ESTIMATES GUIDANCE.—The guidance required to 

be provided under section 3(b) of the Improper Payments Elimination and Recovery Improvement Act of 2012, as in effect on the 

day before the date of enactment of this section— 

(1) shall continue to be in effect on and after the date of enactment of this section; and 

(2) may be modified as determined appropriate by the Director of the Office of Management and Budget. 

SEC. 3354. DO NOT PAY INITIATIVE. 

(a) PREPAYMENT AND PREAWARD PROCEDURES.— 

(1) IN GENERAL.—Each executive agency shall review prepayment and preaward procedures and ensure that a thorough review of available databases with relevant information on eligibility occurs to determine program or award eligibility and prevent improper payments before the release of any Federal funds. 

(2) DATABASES.—At a minimum and before issuing any payment and award, each executive agency shall review as appropriate the following databases to verify eligibility of the payment and award: 

(A) The death records maintained by the Commissioner 

of Social Security. 

(B) The System for Award Management Exclusion 

Records, formerly known as the Excluded Parties List System, of the General Services Administration. 

(C) The Debt Check Database of the Department of the 

Treasury. 

(D) The Credit Alert System or Credit Alert Interactive 

Voice Response System of the Department of Housing and 

Urban Development. 

(E) The List of Excluded Individuals/Entities of the Office of Inspector General of the Department of Health and 

Human Services. 

(F) Information regarding incarcerated individuals 

maintained by the Commissioner of Social Security under 

sections 202(x) and 1611(e) of the Social Security Act (42 

U.S.C. 402(x), 1382(e)). 

(b) DO NOT PAY INITIATIVE.— 

(1) IN GENERAL.—There is the Do Not Pay Initiative, which 

shall include— 

(A) use of the databases described in subsection (a)(2); 

and 

(B) use of other databases designated by the Director of 

the Office of Management and Budget, or the designee of 

the Director, in consultation with executive agencies and in 

accordance with paragraph (2). 

(2) OTHER DATABASES.—In making designations of other 

databases under paragraph (1)(B), the Director of the Office of 

Management and Budget, or the head of any executive agency 

designated by the Director, shall— 

(A) consider any database that substantially assists in 

preventing improper payments; and 

(B) provide public notice and an opportunity for comment 

before designating a database under paragraph (1)(B). 

(3) ACCESS AND REVIEW.— 


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(A) IN GENERAL.—For purposes of identifying and preventing improper payments, each executive agency shall 

have access to, and use of, the Do Not Pay Initiative to 

verify payment or award eligibility in accordance with subsection (a). 

(B) MATCHING PROGRAMS.— 

(i) IN GENERAL.—The head of the agency operating 

the Working System may, in consultation with the Office of Management and Budget, waive the requirements of section 552a(o) of title 5 in any case or class 

of cases for computer matching activities conducted 

under this section. 

(ii) GUIDANCE.—The Director of the Office of Management and Budget may issue guidance that establishes requirements governing waivers under clause (i). 

(C) OTHER ENTITIES.—Each State and any contractor, 

subcontractor, or agent of a State, including a State auditor or State program responsible for reducing improper 

payments of a federally funded State-administered program, and the judicial and legislative branches of the 

United States, as defined in paragraphs (2) and (3), respectively, of section 202(e) of title 18, shall have access to, and 

use of, the Do Not Pay Initiative for the purpose of verifying 

payment or award eligibility for payments. 

(D) CONSISTENCY WITH PRIVACY ACT OF 1974.—To ensure 

consistency with the principles of section 552a of title 5 

(commonly known as the ‘Privacy Act of 1974’), the Director 

of the Office of Management and Budget may issue guidance that establishes privacy and other requirements that 

shall be incorporated into Do Not Pay Initiative access 

agreements with States, including any contractor, subcontractor, or agent of a State, and the judicial and legislative 

branches of the United States, as defined in paragraphs (2) 

and (3), respectively, of section 202(e) of title 18. 

(4) PAYMENT OTHERWISE REQUIRED.—When using the Do Not 

Pay Initiative, an executive agency shall recognize that there 

may be circumstances under which the law requires a payment 

or award to be made to a recipient, regardless of whether that 

recipient is identified as potentially ineligible under the Do Not 

Pay Initiative. 

(5) ANNUAL REPORT.—The Director of the Office of Management and Budget shall submit to Congress an annual report, 

which may be included as part of another report submitted to 

Congress by the Director, regarding the operation of the Do Not 

Pay Initiative, which shall— 

(A) include an evaluation of whether the Do Not Pay Initiative has reduced improper payments or improper 

awards; and 

(B) provide the frequency of corrections or identification 

of incorrect information. 

(c) INITIAL WORKING SYSTEM.—The working system required to be 

established under section 5(d) of the Improper Payments Elimination and Recovery Improvement Act of 2012, as in effect on the 

day before the date of enactment of this section— 


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27 

(1) shall continue to be in effect on and after the date of enactment of this section; and 

(2) shall require each executive agency to review all payments 

and awards for all programs and activities of that executive 

agency through the working system. 

(d) FACILITATING DATA ACCESS BY FEDERAL AGENCIES AND OFFICES OF INSPECTORS GENERAL FOR PURPOSES OF PROGRAM INTEGRITY.— 

(1) COMPUTER MATCHING BY EXECUTIVE AGENCIES FOR THE

PURPOSE OF INVESTIGATION AND PREVENTION OF IMPROPER PAYMENTS AND FRAUD.— 

(A) IN GENERAL.—Except as provided in this paragraph, 

in accordance with section 552a of title 5 (commonly known 

as the ‘Privacy Act of 1974’), the head of each executive 

agency may enter into computer matching agreements with 

other heads of executive agencies that allow ongoing data 

matching, which shall include automated data matching, 

in order to assist in the detection and prevention of improper payments. 

(B) REVIEW.—Not later than 60 days after the date on 

which a proposal for an agreement under subparagraph (A) 

has been presented to a Data Integrity Board established 

under section 552a(u) of title 5 for consideration, the Data 

Integrity Board shall respond to the proposal. 

(C) TERMINATION DATE.—An agreement described in subparagraph (A)— 

(i) shall have a termination date of less than 3 years; 

and 

(ii) during the 3-month period ending on the date on 

which the agreement is scheduled to terminate, may be 

renewed by the executive agencies entering the agreement for not more than 3 years. 

(D) MULTIPLE AGENCIES.—For purposes of this paragraph, section 552a(o)(1) of title 5 shall be applied by substituting ‘between the source agency and the recipient agency or non-Federal agency or an agreement governing multiple agencies’ for ‘between the source agency and the recipient agency or non-Federal agency’ in the matter preceding 

subparagraph (A). 

(E) COST-BENEFIT ANALYSIS.—A justification under section 552a(o)(1)(B) of title 5 relating to an agreement under 

subparagraph (A) is not required to contain a specific estimate of any savings under the computer matching agreement. 

(2) GUIDANCE AND PROCEDURES BY THE OFFICE OF MANAGEMENT AND BUDGET.—The guidance, rules, and procedures required to be issued, clarified, and established under paragraphs 

(3) and (4) of section 5(e) of the Improper Payments Elimination 

and Recovery Improvement Act of 2012, as in effect on the day 

before the date of enactment of this section— 

(A) shall continue to be in effect on and after the date of 

enactment of this section; and 

(B) may be modified as determined appropriate by the 

Director of the Office of Management and Budget. 


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(3) COMPLIANCE.—The head of each executive agency, in consultation with the Inspector General of the executive agency, 

shall ensure that any information provided to an individual or 

entity under this subsection is provided in accordance with protocols established under this subsection. 

(4) RULE OF CONSTRUCTION.—Nothing in this subsection 

shall be construed— 

(A) to affect the rights of an individual under section 

552a(p) of title 5; or 

(B) to impede the exercise of an exemption provided to Inspectors General or by an executive agency in coordination 

with an Inspector General under section 6(j) of the Inspector General Act of 1978 (5 U.S.C. App.). 

(e) PLAN TO CURB FEDERAL IMPROPER PAYMENTS TO DECEASED

INDIVIDUALS BY IMPROVING THE QUALITY AND USE BY FEDERAL

AGENCIES OF THE SOCIAL SECURITY ADMINISTRATION DEATH MAS- TER FILE AND OTHER DEATH DATA.— (1) ESTABLISHMENT.—In conjunction with the Commissioner 

of Social Security and in consultation with relevant stakeholders that have an interest in or responsibility for providing 

the data, and each State, the Director of the Office of Management and Budget shall conduct a study and update the plan required to be established under section 5(g) of the Improper Payments Elimination and Recovery Improvement Act of 2012, as 

in effect on the day before the date of enactment of this section, 

for improving the quality, accuracy, and timeliness of death 

data maintained by the Social Security Administration, including death information reported to the Commissioner under section 205(r) of the Social Security Act (42 U.S.C. 405(r)). 

(2) ADDITIONAL ACTIONS UNDER PLAN.—The plan described in 

this subsection shall include recommended actions by executive 

agencies to— 

(A) increase the quality and frequency of access to the 

Death Master File and other death data; 

(B) achieve a goal of at least daily access as appropriate; 

(C) provide for all States and other data providers to use 

improved and electronic means for providing data; 

(D) identify improved methods by executive agencies for 

determining ineligible payments due to the death of a recipient through proactive verification means; and 

(E) address improper payments made by executive agencies to deceased individuals as part of Federal retirement 

programs. 

(3) REPORT.—Not later than 120 days after the date of enactment of this section, the Director of the Office of Management 

and Budget shall submit a report to Congress on the plan described in this subsection, including recommended legislation. 

SEC. 3355. IMPROVING RECOVERY OF IMPROPER PAYMENTS. 

The Director of the Office of Management and Budget shall determine— 

(1) current and historical rates and amounts of recovery of 

improper payments, or, in cases in which improper payments 

are identified solely on the basis of a sample, recovery rates and 

amounts estimated on the basis of the applicable sample, including a list of executive agency recovery audit contract proVerDate Sep 11 2014 04:50 May 09, 2019 Jkt 089010 PO 00000 Frm 00030 Fmt 6659 Sfmt 6603 E:\HR\OC\SR035.XXX SR035

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grams and specific information of amounts and payments recovered by recovery audit contractors; and 

(2) targets for recovering improper payments, including specific information on amounts and payments recovered by recovery audit contractors. 

SEC. 3356. IMPROVING THE USE OF DATA BY EXECUTIVE AGENCIES 

FOR CURBING IMPROPER PAYMENT. 

(a) PROMPT REPORTING OF DEATH INFORMATION BY THE DEPARTMENT OF STATE AND THE DEPARTMENT OF DEFENSE.—The procedure required to be established under section 7(a) of the Improper 

Payments Elimination and Recovery Improvement Act of 2012, as in 

effect on the day before the date of enactment of this section— 

(1) shall continue to be in effect on and after the date of enactment of this section; and 

(2) may be modified as determined appropriate by the Director of the Office of Management and Budget. 

(b) PROMPT REPORTING OF DEATH INFORMATION BY THE DEPARTMENT OF VETERANS AFFAIRS AND THE OFFICE OF PERSONNEL MANAGEMENT.—Not later than 1 year after the date of enactment of this 

section, the Secretary of Veterans Affairs and the Director of the Office of Personnel Management shall establish a procedure under 

which the Secretary and the Director— 

(1) shall promptly and on a regular basis submit information 

relating to the deaths of individuals, including stopped payments data as applicable, to each executive agency for which the 

Director of the Office of Management and Budget determines receiving and using such information would be relevant and necessary; and 

(2) to facilitate the centralized access of death data for the use 

of reducing improper payments, may identify additional Federal sources of death data and direct the data owner to provide 

that data to 1 or more executive agencies for that purpose. 

(c) GUIDANCE TO EXECUTIVE AGENCIES REGARDING DATA ACCESS

AND USE FOR IMPROPER PAYMENTS PURPOSES.—The guidance required to be issued under section 7(b) of the Improper Payments 

Elimination and Recovery Improvement Act of 2012, as in effect on 

the day before the date of enactment of this section— 

(1) shall continue to be in effect on and after the date of enactment of this section; and 

(2) may be modified as determined appropriate by the Director of the Office of Management and Budget. 

SEC. 3357. FINANCIAL AND ADMINISTRATIVE CONTROLS RELATING TO 

FRAUD AND IMPROPER PAYMENTS. 

(a) DEFINITION.—In this section, the term ‘agency’ has the meaning given the term in section 551 of title 5. 

(b) GUIDELINES.—The guidelines required to be established under 

section 3(a) of the Fraud Reduction and Data Analytics Act of 2015, 

as in effect on the day before the date of enactment of this section— 

(1) shall continue to be in effect on and after the date of enactment of this section; and 

(2) may be periodically modified by the Director of the Office 

of Management and Budget, in consultation with the Comptroller General of the United States, as the Director and Comptroller General may determine necessary. 


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(c) REQUIREMENTS FOR CONTROLS.—The guidelines described in 

subsection (b) shall include— 

(1) conducting an evaluation of fraud risks and using a riskbased approach to design and implement financial and administrative control activities to mitigate identified fraud risks; 

(2) collecting and analyzing data from reporting mechanisms 

on detected fraud to monitor fraud trends and using that data 

and information to continuously improve fraud prevention controls; and 

(3) using the results of monitoring, evaluation, audits, and 

investigations to improve fraud prevention, detection, and response. 

(d) REPORT.—For each of fiscal years 2019 and 2020, each agency 

shall submit to Congress, as part of the annual financial report of 

the agency, a report of the agency on— 

(1) implementing— 

(A) the financial and administrative controls described in 

subsection (b); 

(B) the fraud risk principle in the Standards for Internal 

Control in the Federal Government published by the Government Accountability Office (commonly known as the 

‘Green Book’); and 

(C) Office of Management and Budget Circular A–123, or 

any successor thereto, with respect to the leading practices 

for managing fraud risk; 

(2) identifying risks and vulnerabilities to fraud, including 

with respect to payroll, beneficiary payments, grants, large contracts, and purchase and travel cards; and 

(3) establishing strategies, procedures, and other steps to curb 

fraud. 

SEC. 3358. INTERAGENCY WORKING GROUP FOR GOVERNMENTWIDE 

PAYMENT INTEGRITY IMPROVEMENT. 

(a) WORKING GROUP.— (1) ESTABLISHMENT.—Not later than 90 days after the date of 

enactment of this section, there is established an interagency 

working group on payment integrity— 

(A) to improve— 

(i) State-administered Federal programs to determine eligibility processes and data sharing practices; 

(ii) the guidelines described in section 3357(b) and 

other best practices and techniques for detecting, preventing, and responding to improper payments, including improper payments that are the result of fraud; 

and 

(iii) the sharing and development of data analytics 

techniques to help prevent and identify potential improper payments, including those that are the result of 

fraud; and 

(B) to identify any additional activities that will improve 

payment integrity of Federal programs. 

(2) COMPOSITION.—The interagency working group established under paragraph (1) shall be composed of— 

(A) the Director of the Office of Management and Budget; 

(B) 1 representative from each of the agencies described 

in paragraphs (1) and (2) of section 901(b) of this title; and 


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(C) any other representatives of other executive agencies 

determined appropriate by the Director of the Office of 

Management and Budget, which may include the Chief Information Officer, the Chief Procurement Officer, the Chief 

Risk Officer, or the Chief Operating Officer of an executive 

agency. 

(b) CONSULTATION.—The working group established under subsection (a)(1) may consult with Offices of Inspectors General and 

Federal and non-Federal experts on fraud risk assessments, administrative controls over payment integrity, financial controls, and 

other relevant matters. 

(c) MEETINGS.—The working group established under subsection 

(a)(1) shall hold not fewer than 4 meetings per year. 

(d) REPORT.—Not later than 240 days after the date of enactment 

of this section, the working group established under subsection 

(a)(1) shall submit to Congress a report that includes— 

(1) a plan containing tangible solutions to prevent and reduce 

improper payments; and 

(2) a plan for State agencies to work with Federal agencies 

to regularly review lists of beneficiaries of State-managed Federal programs for duplicate enrollment between States, including how the Do Not Pay Business Center and the data analytics 

initiative of the Department of the Treasury could aid in the detection of duplicate enrollment. 

* * * * * * * 

CHAPTER 35—ACCOUNTING AND COLLECTION 

* * * * * * * 

Subchapter VI—Recovery Audits 

* * * * * * * 

SEC. 3562. DISPOSITION OF RECOVERED FUNDS. 

(a) AVAILABILITY OF FUNDS FOR RECOVERY AUDITS AND ACTIVITIES PROGRAM.—Funds collected under a program carried out by an 

executive agency under øsection 3561¿ section 3352(i) of this title 

shall be available to the executive øagency for the following purposes: 

(1) To reimburse¿ agency to reimburse the actual expenses 

incurred by the executive agency in the administration of the 

program. 

ø(2) To pay contractors for services under the program in accordance with the guidance issued under section 3561(c)(5) of 

this title.¿ 

* * * * * * * 

TITLE 42—THE PUBLIC HEALTH SERVICE 

* * * * * * * 

CHAPTER 7—SOCIAL SECURITY 

* * * * * * * 


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Subchapter XXI—State Children’s Health Insurance 

Program 

SEC. 1397EE. PAYMENTS TO STATES. 

(a) * * * 

(b) * * * 

(c) LIMITATION ON CERTAIN PAYMENTS FOR CERTAIN EXPENDITURES.— 

(1) * * * 

(2) LIMITATION ON EXPENDITURES NOT USED FOR MEDICAID OR

HEALTH INSURANCE ASSISTANCE.— 

(A) * * * 

(B) * * * 

(C) NONAPPLICATION TO CERTAIN EXPENDITURES.—The 

limitation under subparagraph (A) shall not apply with respect to the following expenditures: 

(i) * * * 

* * * * * * * 

(iv) PAYMENT ERROR RATE MEASUREMENT (PERM)

EXPENDITURES.—Expenditures related to the administration of the payment error rate measurement 

(PERM) requirements applicable to the State child 

health plan in accordance with the øImproper Payments Information Act of 2002¿ subchapter IV of chapter 33 of title 31, United States Code and parts 431 

and 457 of title 42, Code of Federal Regulations (or 

any related or successor guidance or regulations). 

* * * * * * * 

(11) ENHANCED PAYMENTS.—Notwithstanding subsection (b), 

the enhanced FMAP with respect to payments under subsection (a) for expenditures related to the administration of the 

payment error rate measurement (PERM) requirements applicable to the State child health plan in accordance with the 

øImproper Payments Information Act of 2002¿ subchapter IV 

of chapter 33 of title 31, United States Code and parts 431 and 

457 of title 42, Code of Federal Regulations (or any related or 

successor guidance or regulations) shall in no event be less 

than 90 percent. 

* * * * * * * 

Æ 


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