U.S. RAILROAD RETIREMENT BOARD

OFFICE OF INSPECTOR GENERAL 

The Railroad Retirement Board 

was Not Compliant with the 

Payment Integrity Information 

Act for Fiscal Year 2020

Report No. 21-05 May 17, 2021
OFFICE OF INSPECTOR GENERAL

U.S. RAILROAD RETIREMENT BOARD

The Railroad Retirement Board was Not Compliant with the 

Payment Integrity Information Act for Fiscal Year 2020

Report Summary May 17, 2021 Report No. 21-05

What We Found 

The Railroad Retirement Board (RRB) was not compliant with 

the Payment Integrity Information Act of 2019 (PIIA) because it 

did not satisfy five of six payment integrity reporting 

requirements. This occurred because the RRB did not publish 

payment integrity information or improper payment data for 

Railroad Medicare.

We further determined that (1) the agency’s payment integrity 

data call reporting was incomplete, and therefore inaccurate;

(2) some of RRB’s additional reporting requirements pertaining 

to improper payment barriers and accountability, information 

systems and other infrastructure were missing; and (3) Railroad 

Medicare improper payment data was not transparent in the 

Department of Health and Human Services’ fiscal year 2020 

Agency Financial Report.

What We Recommend

To address the exceptions outlined in this audit report, we 

made eight recommendations related to PIIA compliance, and 

annual data call and supplemental data call completeness.

RRB management did not concur with any of our eight

recommendations. RRB’s position was that the Centers for 

Medicare and Medicaid Services was responsible for the 

Medicare program as a whole, the RRB’s Medicare 

responsibilities were limited overall, and if RRB published 

Railroad Medicare payment integrity information it would have 

resulted in duplicative reporting. We disagreed with this 

position and continue to see the need for our 

recommendations, as explained throughout this report.

What We Did 

Section 3353 (a)(1)(A) of PIIA

requires each agency’s Inspector 

General to assess annual 

compliance. Our audit procedures 

included identification of criteria; 

and assessment of the accuracy and 

completeness of agency reporting, 

accompanying material, and related 

postings.

The mandated objectives of this 

audit were to

 determine whether the RRB is in 

compliance with the law; 

 evaluate the accuracy of RRB risk 

assessments and improper 

payment estimates 

methodology; 

 evaluate whether the RRB had

correctly identified the causes of 

improper payments and whether 

the actions of the RRB to address 

those causes are adequate and 

effective; 

 evaluate the adequacy of RRB 

action plans on how to address 

the causes of improper 

payments; and 

 evaluate RRB efforts to prevent, 

reduce and recover improper 

payments.

The scope of the audit was improper 

payment data reported in the RRB’s 

fiscal year 2020 Performance and 

Accountability Report.
OFFICE OF INSPECTOR GENERAL – U.S. RAILROAD RETIREMENT BOARD 

Contents

INTRODUCTION 1

OBJECTIVES, SCOPE, AND METHODOLOGY 1

BACKGROUND 3

RAILROAD MEDICARE, PAYMENT INTEGRITY REPORTING, AND IMPROPER PAYMENT DATA 5

RESULTS OF AUDIT 7

PAYMENT INTEGRITY REPORTING REQUIRED IN STATUTE 8

REQUIREMENT #1 – RRB DID NOT PUBLISH A COMPLETE PERFORMANCE AND 

ACCOUNTABILITY REPORT 8

RECOMMENDATION 9

MANAGEMENT’S COMMENTS AND OUR RESPONSE 9

REQUIREMENT #2 – RRB CONDUCTED ITS REQUIRED RISK ASSESSMENTS 12

REQUIREMENTS #3 THROUGH #6 – RRB DID NOT PUBLISH AN IP ESTIMATE, A 

CORRECTIVE ACTION PLAN, OR A REDUCTION TARGET, OR REPORT AN IP RATE OF LESS 

THAN 10 PERCENT FOR RAILROAD MEDICARE 13

RECOMMENDATIONS 14

MANAGEMENT’S COMMENTS AND OUR RESPONSE 15

RRB’S PAYMENT INTEGRITY DATA CALL REPORTING WAS INCOMPLETE AND INACCURATE 15

RECOMMENDATION 17

MANAGEMENT’S COMMENTS AND OUR RESPONSE 17

ADDITIONAL REPORTING REQUIRED IN STATUTE 17

INFORMATION ON RAILROAD MEDICARE IMPROPER PAYMENT BARRIERS,

ACCOUNTABILITY, INFORMATION SYSTEMS, AND OTHER INFRASTRUCTURE WAS MISSING 18

RECOMMENDATION 19

MANAGEMENT’S COMMENTS AND OUR RESPONSE 19

OTHER OBSERVATIONS 19

RAILROAD MEDICARE IMPROPER PAYMENT DATA IS NOT TRANSPARENT IN HHS’ FISCAL 

YEAR 2020 AGENCY FINANCIAL REPORT 19

APPENDIX I: MANAGEMENT COMMENTS 21

APPENDIX II: PREVIOUS OFFICE OF INSPECTOR GENERAL OPEN AUDIT RECOMMENDATIONS FOR IMPROPER 

PAYMENT REPORTING 25

APPENDIX III: ABBREVIATIONS 30
OFFICE OF INSPECTOR GENERAL – U.S. RAILROAD RETIREMENT BOARD 

LIST OF TABLES

TABLE 1. ASSESSMENT OF RRB’S COMPLIANCE WITH PIIA 7
OFFICE OF INSPECTOR GENERAL - RAILROAD RETIREMENT BOARD

RRB’s Noncompliance with Improper Payments Reporting - Report No. 21-05 1

INTRODUCTION

This report presents the results of the Office of Inspector General’s (OIG) audit titled, The 

Railroad Retirement Board was Not Compliant with the Payment Integrity Information Act for 

Fiscal Year 2020. The Payment Integrity Information Act of 2019 (PIIA) repealed the Improper 

Payments Elimination and Recovery Act (IPERA) and other laws, but set forth similar improper 

payment reporting requirements, including an annual compliance report by Inspectors 

General.

1

Objectives, Scope, and Methodology

The mandated objectives of this audit were to 

 determine whether the RRB was in compliance with the law;

 evaluate the accuracy of RRB risk assessments and improper payment estimates 

methodology;

 evaluate whether the RRB had correctly identified the causes of improper payments and 

whether the actions of the RRB to addressed those causes are adequate and effective;

 evaluate the adequacy of RRB action plans on how to address the causes of improper 

payments; and 

 evaluate RRB efforts to prevent, reduce, and recover improper payments.

The scope of this audit was the information published in the RRB’s Payment Integrity section of 

its fiscal year 2020 Performance and Accountability Report (PAR). Payment integrity 

information and improper payment data reported in the PAR consisted of fiscal years 2018 and 

2019 overpayments recaptured, outside of payment recapture audits for the RRB’s Railroad 

Retirement Act (RRA) and Railroad Unemployment Insurance Act (RUIA) programs. The RRB did 

not report improper payment data on its Railroad Medicare program.

To accomplish the audit objectives, we

 assessed whether the RRB was in overall compliance with PIIA;

 assessed the accuracy and completeness of agency reporting;

 evaluated the accuracy of the agency’s risk assessments and their improper payment 

estimates methodology;

 identified criteria from the law as well as Office of Management and Budget (OMB)

government-wide guidance;

 1 Pub. L. No. 116-117, 134 Stat. 113 (2020), Pub. L. No. 114-186, 130 Stat. 547 (2016), Pub. L. No. 112-248, 126 Stat. 

2390 (2013), Pub. L. No. 111-204, 124 Stat. 2224 (2010), Pub. L. No. 107-300, 116 Stat. 2350 (2002).
OFFICE OF INSPECTOR GENERAL - RAILROAD RETIREMENT BOARD

RRB’s Noncompliance with Improper Payments Reporting - Report No. 21-05 2

 identified and reviewed internal guidance, policies, and procedures for payment 

integrity reporting in the RRB PAR;

 reviewed the RRB's payment integrity section as provided in the fiscal year 2020 PAR, 

accompanying material, the OMB annual data call and supplemental data call;

 requested and review applicable source data and documentation from the agency to 

verify the support for the information in the PAR and data calls; 

 evaluated whether the RRB correctly identified the causes of improper payments and 

whether their actions addressed those causes adequately and effectively;

 evaluated the adequacy of RRB’s action plans in addressing the causes of its improper 

payments;

 evaluated the agency’s efforts in preventing, reducing, and recovering improper 

payments;

 interviewed appropriate RRB officials and agency staff; 

 determined if Railroad Medicare’s improper payment estimate had been reported in the 

appropriate Department of Health and Human Services (HHS) and/or Centers for 

Medicare and Medicaid Services (CMS) Agency Financial Report (AFR);

 reviewed appropriate CMS documentation; and

 reviewed agency documentation.

We assessed the data reliability of the RRB’s risk assessment and payment recapture data, 

appropriate to the risk of using the data by (1) tracing payment integrity totals reported in the 

PAR to source documents, (2) reviewing the underlying spreadsheet formulas supporting the 

source data calculations, and (3) considering the overall risk of the RRB’s systems that provided 

the source data. We determined that the data were sufficiently reliable for the purposes of 

responding to our objectives. In addition, we determined that reliability of data would not 

materially affect our findings, conclusions, or recommendations.

Our review of internal controls was limited to those necessary to address the objectives and 

scope of the audit. For example, we used the Council of the Inspectors General on Integrity and 

Efficiency’s Guidance for Improper Payments Elimination and Recovery Act Compliance Reviews, 

Part III, Section B of Appendix C to OMB Circular No. A-123, Requirements for Payment Integrity 

Improvement (OMB M-18-20), OMB Circular No. A-123, Management’s Responsibility for 

Enterprise Risk Management and Internal Control (OMB M-16-17) to conduct our evaluation of 

the RRB’s internal control over payment integrity and OMB Circular No. A-136, Financial 

Reporting Requirements.

2

 2 Council of the Inspectors General on Integrity and Efficiency, Guidance for Payment Integrity Information Act

Compliance Reviews (Washington, D.C.: November 30, 2020); Office of Management and Budget (OMB) Appendix 

C to Circular No. A-123, Requirements for Payment Integrity Improvement, M-18-20 (Washington, D.C.: 

June 26, 2018); OMB Circular No. A-123, Management’s Responsibility for Enterprise Risk Management and 

Internal Control, M-16-17 (Washington, D.C.: July 15, 2016); and OMB Circular No. A-136, Financial Reporting 

Requirements (Washington, D.C.: August 27, 2020).
OFFICE OF INSPECTOR GENERAL - RAILROAD RETIREMENT BOARD

RRB’s Noncompliance with Improper Payments Reporting - Report No. 21-05 3

We conducted this performance audit in accordance with generally accepted government 

auditing standards. Those standards require that we plan and perform the audit to obtain 

sufficient, appropriate evidence to provide a reasonable basis for our findings and conclusions 

based on our audit objectives. We believe that the evidence obtained provides a reasonable 

basis for our findings and conclusions based on our audit objectives.

We conducted our fieldwork at RRB headquarters in Chicago, Illinois from December 2020

through April 2021.

Background

The RRB, an independent agency in the executive branch of the Federal Government, 

administers retirement-survivor and unemployment-sickness insurance benefit programs for 

railroad workers and their families under the RRA and RUIA. The RRB paid $13.2 billion in 

retirement and survivor benefits and $198.9 million in unemployment and sickness insurance 

benefits during fiscal year 2020. The RRB also administers aspects of the Medicare program

(Railroad Medicare) under the Social Security Act.3 The RRB, through its contractor, paid 

$855.8 million in Railroad Medicare Part B claims on behalf of its beneficiaries from 

October 1, 2019 through September 30, 2020.

Improper payment legislation enacted to reduce improper payments, directed OMB to issue 

governmentwide guidance regarding reporting requirements. PIIA defines an improper 

payment as any payment that should not have been made or that was made in an incorrect 

amount (including overpayments and underpayments) under statutory, contractual, 

administrative, or other legally applicable requirements. An improper payment includes any 

payment to an ineligible recipient, any payment for an ineligible good or service, any duplicate 

payment, and any payment for a good or service not received (except for such payments 

authorized by law).4

The IPERA amended the Improper Payments Information Act of 2002, and based on guidance 

provided by OMB, required agencies to identify and review all programs and activities they 

administer that may be susceptible to significant improper payments. In addition, section 3 of 

IPERA required Inspectors General to review each agency’s improper payment reporting and 

issue an annual report. On March 2, 2020, the PIIA repealed IPERA and other laws, but set forth 

similar improper payment reporting requirements, including an annual compliance report by 

Inspectors General. Because final OMB guidance related to PIIA was not expected to be issued 

until February 2021, as directed by OMB and Counsel of the Inspectors General on Integrity and 

Efficiency, we initiated our FY 2020 annual compliance review using a combination of the 

requirements in OMB M-18-20, OMB Circular A-136, OMB Annual Data Call Instructions, OMB 

Payment Integrity Question and Answer Platform, and the Counsel of the Inspectors General on

Integrity and Efficiency guidance required under PIIA.

 3 42 U.S.C. § 1842(g). The portion of Medicare the Railroad Retirement Board (RRB) is responsible for is commonly 

known as Railroad Medicare. The term can be found on Google and throughout Palmetto GBA’s website. 4 Pub. L. No. 116-117 (2020), 134 Stat. 114, Pub. L. No. 111-204 (2010), 124 Stat. 2224, Pub. L. No. 112-248 (2013), 

126 Stat. 2390, and Pub. L. No. 107-300 (2002), 116 Stat. 2350.
OFFICE OF INSPECTOR GENERAL - RAILROAD RETIREMENT BOARD

RRB’s Noncompliance with Improper Payments Reporting - Report No. 21-05 4

The primary criteria derived from federal improper payment laws were

 OMB Circular No. A-123, Management’s Responsibility for Enterprise Risk Management 

and Internal Control (OMB M-16-17); 

 Appendix C to OMB Circular No. A-123, Requirements for Payment Integrity 

Improvement (OMB M-18-20); and

 OMB Circular No. A-136, Financial Reporting Requirements. 

OMB M-18-20 defined significant improper payments “...as gross annual improper payments 

(i.e., the total amount of overpayments and underpayments) in the program exceeding (1) both 

1.5 percent of program outlays and $10,000,000 of all program or activity payments made 

during the fiscal year reported or (2) $100,000,000 (regardless of the improper payment 

percentage of total program outlays).”5 The guidance also required agencies to approach 

improper payments with an Enterprise Risk Management (ERM) framework in mind and link 

agency efforts in establishing internal controls and preventing improper payments. According 

to OMB M-18-20,

... [ERM] framework can be used to assist in the management of payment integrity 

risk. Management is required to manage their payment integrity risk to an agency 

achieving its strategic, operations, reporting, or compliance objectives. While the 

extent of this may differ among agencies, ensuring the integrity of federal payments 

is fundamental to the core mission for agencies. 

Part of an ERM model is the extended enterprise. According to OMB M-16-17 and

OMB M-18-20, the extended enterprise consists of interdependent relationships, parent-child 

relationships, and relationships external to an agency. Thus, no agency is self-contained. In the 

context of ERM and the management of payment integrity risk, the extended enterprise 

includes state, local governments, other departments and agencies, or third party service 

providers. Although agency’s have less control, they still maintain responsibility for managing 

risk to payment integrity that comes from the extended enterprise. Despite having little or no 

control, agencies retain the responsibility for the management of payment integrity risk that 

comes from the greater risk environment.

Within the RRB, the Office of Programs compiles and reports improper payment data for the 

annual PAR. OMB guidance requires each agency’s Inspector General (IG) to assess [PIIA] 

compliance and submit its final report by May 15th of the following year after the issuance of 

the agency’s PAR.6 Agencies that are noncompliant with PIIA are subject to additional reporting 

requirements. Noncompliance for one year requires that the agency submit a plan describing 

the actions to be taken to become compliant. Noncompliance for two consecutive fiscal years 

for the same program requires a review from OMB to determine if additional funding would 

help the agency become compliant.7

 5 Also known as “programs and activities identified under section 3(A)(i) of the Payment Integrity Information

Act of 2019” per 31 U.S.C. § 3352. 6 OMB M-18-20. 7 Pub. L. No. 116-117, 134 Stat. 125; Section 3353 (B)(2)(A).
OFFICE OF INSPECTOR GENERAL - RAILROAD RETIREMENT BOARD

RRB’s Noncompliance with Improper Payments Reporting - Report No. 21-05 5

Railroad Medicare, Payment Integrity Reporting, and Improper Payment Data

At the end of fiscal year 2020, approximately 453,000 qualified railroad beneficiaries were 

enrolled in the RRB’s administered portion of Medicare Part B. During fiscal year 2020, the RRB 

contracted with a Specialty Medicare Administrative Contractor (SMAC), Palmetto, GBA

(Palmetto) and administered certain provisions of the Medicare program.

8 These provisions 

included eligibility determination, enrollment or removal from enrollment, premium collection, 

processing state buy-ins, processing arrearages and refunds, paying Canadian Part A claims, 

liaison work with Palmetto, quality assurance and oversight of Palmetto, records maintenance, 

and answering inquiries. According to the RRB, these costs were offset by approximately $14.2

million in Railroad Medicare administrative expense reimbursements and $19.9 million in 

transfers from CMS to fund the SMAC.

9

As such, CMS has paid the RRB for these administrative services through an existing and 

ongoing cost reimbursement agreement. For fiscal year 2020, the total expense of $34.1 million 

covered both direct and indirect costs for the RRB and the RRB OIG and the cost of its Palmetto 

contract to support the separate Railroad Medicare program.

With respect to the Railroad Medicare program, payment integrity reporting, and improper 

payment data, the RRB maintained an extended enterprise relationship with CMS and the RRB’s 

SMAC, Palmetto. At the time of this audit, the governing documents between RRB, CMS, and 

Palmetto were the

 Interagency Agreement between HHS (CMS) and RRB, dated April 19, 1991, signed by 

the Health Care Finance Administration’s (now CMS) Director of Office of Budget and 

Administration on April 16, 1991 and by RRB’s Chief Executive Officer on 

March 22, 1991; 

 Addendum to the Interagency Agreement between HHS (CMS) and RRB, dated 

July 26, 2004, signed by CMS’ Director of Office of Financial Management on 

July 23, 2004 and by RRB’s Senior Executive Officer on July 30, 2004; 

 Memorandum of Understanding (MOU) between CMS and RRB (MOU13-61), signed by 

CMS’ Deputy Center Director of the Center for Medicare on April 11, 2013 and by RRB’s 

Director of Administration and Senior Procurement Executive on April 12, 2013; and

 RRB’s Palmetto contract – RRB12C011 and corresponding statement of work. The SMAC 

contract was signed by Palmetto’s President on November 26, 2012 and by RRB’s Chief 

of Acquisition Management and Contracting Officer on November 27, 2012.

 8 As part of its administrative responsibilities, the RRB selected a Specialty Medicare Administrative Contractor to 

process Railroad Medicare claims nationwide and administered the contract with the carrier, Palmetto GBA. The 

contracting officer, contracting officer representative, and the contracting team are all RRB government 

employees.

9 The Centers for Medicare & Medicaid Services, a branch of the U.S. Department of Health and Human Services, is 

the federal agency that administers the national Medicare program.
OFFICE OF INSPECTOR GENERAL - RAILROAD RETIREMENT BOARD

RRB’s Noncompliance with Improper Payments Reporting - Report No. 21-05 6

The governing documents have not changed since we published the results of our prior 

mandated improper payment audit.

As part of an extended enterprise, CMS provided the RRB with Railroad Medicare payment 

integrity information and data for the third year in a row, in time for fiscal year 2020 PAR 

reporting. The Railroad Medicare improper payment rate and estimates were determined 

through CMS’ Comprehensive Error Rate Testing (CERT) program. As such, the RRB should have 

reported Railroad Medicare payment integrity information, including its fiscal year 2019 

9.3 percent improper payment rate that exceeded the national Part B improper payment rate 

of 8.6 percent, to the President and Congress in its PAR which it did not. We discuss this in the 

section titled Requirements #3 through #6 – RRB did not Publish an IP Estimate, a Corrective 

Action Plan, or a Reduction Target, or Report an IP Rate of Less than 10 Percent for Railroad 

Medicare.
OFFICE OF INSPECTOR GENERAL - RAILROAD RETIREMENT BOARD

RRB’s Noncompliance with Improper Payments Reporting - Report No. 21-05 7

RESULTS OF AUDIT

We have determined the RRB was not compliant with PIIA because it did not satisfy five of six 

payment integrity reporting requirements as shown in Table 1.

10 If an agency does not meet 

one or more of the six requirements, then it is not compliant under PIIA. The RRB’s position was 

that CMS is responsible for the Medicare program as a whole, the RRB’s Medicare 

responsibilities were limited overall, and if RRB published Railroad Medicare payment integrity 

information, it would have resulted in duplicative reporting.

Table 1. Assessment of RRB’s Compliance with PIIA

Program Name

#1 - Published a PAR

#2 - Conducted a Risk Assessment

#3 - Published an Improper Payment 

Estimate

#4 - Published Corrective Action 

Plans

#5 - Published and is Meeting 

Reduction Targets

#6 - Reported an Improper Payment 

Rate of Less than 10 Percent

RRA Compliant Compliant Not applicable Not applicable Not applicable Not applicable

RUIA Compliant Compliant Not applicable Not applicable Not applicable Not applicable

Railroad

Medicare

Noncompliant Not applicable Noncompliant Noncompliant Noncompliant Noncompliant

Vendor 

Payments

Compliant Compliant Not applicable Not applicable Not applicable Not applicable

Employee 

Payments

Compliant Compliant Not applicable Not applicable Not applicable Not applicable

Source: RRB OIG analysis of fiscal year 2020 Performance and Accountability Report (PAR).

We determined the agency’s payment integrity reporting was incomplete and therefore 

inaccurate. The agency could correct these deficiencies by implementing recommendations 

made in our prior RRB OIG improper payment audit. At the time of this audit, the prior year 

audit recommendations remained open.

11

Risk assessments were required for the RRA, RUIA, Vendor Payments, and Employee Payments

three year cycle and were reviewed during this audit. As part of this audit, we determined some 

of RRB’s additional reporting requirements pertaining to improper payment barriers, improper 

payment accountability, and information systems and other infrastructure were missing. In a 

prior RRB OIG audit, we made recommendations to correct these issues. At the time of this 

audit, the prior year audit recommendations remained open.12

 10 Pub. L. 116-117, 134 Stat. 113 (2020). 11 RRB Office of Inspector General (OIG), Audit of Railroad Retirement Board’s Compliance with Improper Payments 

Elimination and Recovery Act in Fiscal Year 2019 Performance and Accountability Report, Report No. 20-06

(Chicago, IL: May 12, 2020), Recommendations 1, 2, 3, 4, and 5. 12 RRB OIG, Report No. 20-06, Recommendations 15 and 16.
OFFICE OF INSPECTOR GENERAL - RAILROAD RETIREMENT BOARD

RRB’s Noncompliance with Improper Payments Reporting - Report No. 21-05 8

Beginning with fiscal year 2020, PIIA requires that we annually assess and report on six areas of 

compliance with criteria listed in the law. We considered OMB and Council of Inspectors 

General on Integrity and Efficiency guidance for our evaluations of the additional reporting 

required in statute. We have provided the details of these compliance assessments, audit 

findings, observations, and recommendations for corrective action in this report.

We made eight recommendations to address the exceptions identified during our audit. The full 

text of management’s response to these recommendations is included in Appendix I.

Payment Integrity Reporting Required in Statute

The RRB was not compliant with PIIA because it did not satisfy five of six payment integrity 

reporting requirements as shown in Table 1.

13 If an agency does not meet one or more of the 

six requirements, then it is not compliant under PIIA. The RRB’s position was that CMS is 

responsible for the Medicare program as a whole, the RRB’s Medicare responsibilities were 

limited overall, and if RRB published Railroad Medicare payment integrity information it would 

have resulted in duplicative reporting. We discuss our findings in the following sections.

Requirement #1 – RRB Did Not Publish a Complete Performance and 

Accountability Report

Although the RRB published a PAR with payment integrity information, it was not 

complete because it did not include improper payment information for the Railroad 

Medicare program nor did it explain why the information was not included, as it did in 

the prior year’s PAR.

Under the PIIA, an executive agency shall publish improper payments information with the 

annual financial statement of the executive agency for the most recent fiscal year. The agency 

shall post this statement and any accompanying materials required under OMB’s guidance on 

their website.

14

The RRB didn’t include Railroad Medicare improper payment data in their PAR or data call 

because they believe that since HHS is already reporting Railroad Medicare improper 

payment information the reporting by the RRB would be duplicate reporting. The 

RRB stated in its fiscal year 2019 PAR 

The CERT program is administered by CMS and includes testing for all Medicare 

Administrative Contractors, including the RRB SMAC. Fiscal year 2018 was the first 

year that the SMAC was included in the testing program. As a result, the RRB 

reported the findings in the 2018 [PAR]. It was subsequently learned that these same 

testing results were captured by the Department of Health and Human Services in 

their 2018 Agency Financial Report, resulting in duplicative reporting.

 13 Pub. L. 116-117, 134 Stat. 113 (2020). 14 31 U.S.C. §3351(2)(A).
OFFICE OF INSPECTOR GENERAL - RAILROAD RETIREMENT BOARD

RRB’s Noncompliance with Improper Payments Reporting - Report No. 21-05 9

Although the RRB claims that HHS is reporting improper payments for the Railroad Medicare 

program, HHS reporting does not identify improper payments for the Railroad Medicare 

program. A reader of the PAR would be confused as the Payment Integrity section states that 

the RRB has a Railroad Medicare Benefit payment program but then makes no further 

explanation as to why no additional information is included in the PAR. 

Recommendation

We recommend that the Office of Programs

1. publish Railroad Medicare program payment integrity information in accordance with 

the Payment Integrity Information Act of 2019 and the Office of Management and 

Budget’s data call requirements until it formalizes an agreement with the Centers for 

Medicare and Medicaid Services to take over reporting for Railroad Medicare.

Management’s Comments and Our Response

For recommendation 1, the Office of Programs nonconcurred and stated,

[t]he [RRB] has consistently acknowledged its responsibilities under the Social Security Act to administer 

certain provisions of the Medicare program for the railroad, including the administration of the [SMAC]

contract with [Palmetto]. RRB does not issue Medicare payments to beneficiaries or providers directly. 

Notwithstanding the Agency’s specified Medicare responsibilities for railroad annuitants, the [CMS], a 

component of the [HHS], administers the Medicare program as a whole. 

In connection with this audit, on March 25, 2021 via an email to the RRB [OIG], CMS confirmed that the 

[Palmetto] had claims sampled and reviewed in the calculation of the fiscal year 2020 Medicare Fee-forService (FFS) improper payment rate based upon claims from July 2018 – June 2019, where said improper 

payment rate was reported in the CMS 2020 Financial Report. Please note that CMS categorizes 

[Palmetto] as a Medicare Administrative Contractor (MAC) rather than a SMAC. Since CMS is a 

component of HHS, HHS consolidates CMS’ financial results and related Medicare improper payment 

information into its financial statements presented in its annual [AFR]. In its AFR, HHS reports the 

estimated proper and improper payments and related information for the Medicare FFS program as a 

whole, to include the results of all MACs. The Medicare FFS is a component discussed within the 2020 

CMS Financial Report as well as presented in the Payment Integrity Report that HHS published in its fiscal 

year 2020 AFR to accompany its consolidated Principal Financial Statements. 

Even so, the OIG continues to assert that the RRB is responsible for reporting improper payments related 

to the Railroad Medicare program and that HHS reporting does not identify improper payments for the 

Railroad Medicare program. However, under the [PIIA], an executive agency shall publish improper 

payments information with the annual financial statements of the executive agency for the most recent 

fiscal year and post on the website of the agency that statement and any accompanying materials 

required under the guidance of the Office of Management and Budget. [31 USC 3351(2)(A)] As such, it 

continues to be RRB’s position that improper payments information related to the Medicare Part B 

medical services benefits payments issued by [Palmetto] should not accompany RRB’s financial 

statements in its annual [PAR]. 

The RRB is responsible for making benefit payments to eligible Railroad beneficiaries under the [RRA], the 

[RUIA], as well as extended, enhanced, or other unemployment benefits payments authorized under 
OFFICE OF INSPECTOR GENERAL - RAILROAD RETIREMENT BOARD

RRB’s Noncompliance with Improper Payments Reporting - Report No. 21-05 10

supplemental appropriations, and therefore, its financial statements reflect the financial results for 

accounts financing these benefit payments and related operations. To ensure proper preparation of the 

government-wide consolidated financial statements, RRB and CMS record intra-governmental 

transactions to reflect business activities conducted between our agencies to include reimbursement to 

the RRB for its specified Medicare administrative responsibilities, funding transferred for obligation on 

the contract with [Palmetto] as well as results of the annual financial interchange. 

While the RRB has certain financial transactions with CMS and specified Medicare administrative 

responsibilities for railroad annuitants, said transactions and responsibilities do not include financing the 

Part B medical services benefit payments issued by [Palmetto]. Instead, [Palmetto] in accordance with 

CMS policy has an established Tripartite agreement with CMS and a CMS appointed bank, whereby 

funding is provided from the Medicare trust funds for Part B medical services benefit payments. The RRB 

is not a party to the financial transactions to pay the Medicare Part B medical services benefits financed 

by CMS and issued by [Palmetto]. RRB does not and should not report or disclose these financial 

transactions in its financial statements. 

It is RRB’s position that Medicare improper payment information should continue to accompany the 

financial statements of CMS and the consolidated financial statements of HHS, rather than those of the 

RRB, since the CMS’ financial statements and HHS consolidated financial statements report the cost of 

the Medicare program in its entirety. By maintaining this posture, RRB and CMS continue to provide 

interested parties with the programmatic cost of the Medicare program in its entirety for comparison to 

the improper payment information covering the Medicare program in its entirety, as we interpret the 

PIIA to intend. 

The comments provided by management did not warrant a modification to our report.

We continue to disagree with the RRB’s position that they do not have to report improper 

payment data for the Railroad Medicare program. Under the RRB’s current Specialty Medicare 

Administrative Contractor (SMAC) contract and MOU, the RRB is responsible for SMAC contract 

administration, oversight, and payment integrity reporting for the Railroad Medicare program. 

As previously stated, while the RRB and CMS plan to revise the MOU, this process was 

postponed due to CMS’ administrative changes and its shifting of resources to address 

coronavirus activities and is expected to resume sometime during the current fiscal year. 

Because a revised MOU, that clearly states that CMS is responsible for reporting improper 

payment data for the Railroad Medicare program, is not in effect the RRB remains responsible 

for reporting Railroad Medicare improper payment data. 

In addition, RRB’s management response included inaccurate statements that it is not a party 

to the financial transactions to pay the Medicare Part B medical services benefits financed by 

CMS and issued by Palmetto, GBA LLC and that it does not and should not report or disclose 

these financial transactions in its financial statements. Effective as of fiscal year 2019, RRB 

reports program administration reimbursements on its Statement of Net Cost and SMAC 

contract payment transfers on the Statement of Changes in Net Position. Prior to 

fiscal year 2019, the transfers were included with reimbursements and reported on the 

Statement of Net Cost. A legal opinion concerning the accounting for intragovernmental 

transfers resulted in this change.
OFFICE OF INSPECTOR GENERAL - RAILROAD RETIREMENT BOARD

RRB’s Noncompliance with Improper Payments Reporting - Report No. 21-05 11

As discussed in our prior report and reiterated later in this report, OMB guidance requires that, 

“[a]gencies should not put programs or activities into groupings that may mask significant 

improper payment rates by the large size or scope of a grouping.”15 Therefore, the RRB should 

ensure the transparency of its improper payment information for this program as it is 

responsible for its oversight and administration. Because the RRB did not comply with PIIA, the 

Railroad Medicare program’s improper payment rate of 9.3 percent and its estimated improper 

payments of $81.2 million went unreported for the current reporting year. 

In the section of this report titled, RRB’s Payment Integrity Data Call Reporting was Incomplete 

and Inaccurate, we discussed RRB’s failure to properly respond to OMB data call questions 

including those for Railroad Medicare. Because the RRB’s data call responses were not 

complete and accurate, RRB did not provide OMB with the information it needs to ensure

sufficient payment integrity oversight over the Railroad Medicare program. 

In the section of this report titled, Information on Railroad Medicare Improper Payment 

Barriers, Accountability, Information Systems, and Other Infrastructure was Missing, we 

determined that without annual performance appraisal criteria, Railroad Medicare program 

officials would not be held accountable for reducing and recapturing improper payments. 

Further, RRB’s decision not to address supplemental data call questions for the Railroad 

Medicare program hinders OMB’s efforts to assist RRB in reducing its improper payments.

We further discussed duplication and transparency issues in the section of this report titled

Railroad Medicare Improper Payment Data is Not Transparent in HHS’ Fiscal Year 2020 Agency 

Financial Report. We observed that HHS only includes Railroad Medicare program improper 

payment information as part of their national Part B improper payment rate and does not 

report it or identify it separately.

RRB believes that its informal agreement with CMS supersedes its payment integrity 

requirements under PIIA for the Railroad Retirement program.

While PIIA compliance requires the RRB to include the Railroad Medicare program in its 

payment integrity reporting, RRB’s decision to exclude Railroad Medicare requires revision of its 

MOU with CMS and formal approval by OMB. Until these necessary actions are completed, RRB 

will be noncompliant with PIIA’s payment integrity requirements.

 15 OMB M-18-20.
OFFICE OF INSPECTOR GENERAL - RAILROAD RETIREMENT BOARD

RRB’s Noncompliance with Improper Payments Reporting - Report No. 21-05 12

Requirement #2 – RRB Conducted its Required Risk Assessments

The RRB was required to conduct risk assessments for four of RRB’s five programs during the 

fiscal year 2020 PAR reporting cycle. This is the second of six payment integrity reporting 

requirements. The RRB performed risk assessments for its four benefit and non-benefit paying 

programs. Therefore, RRB was compliant with the second of its six requirements. Risk 

assessments were applicable for the four programs as part of its required three year risk 

assessment cycle. Risk assessments for the four programs had been previously completed 

during fiscal year 2017. During the interim period from fiscal year 2017 through fiscal year 

2021:

 OMB granted the RRB relief from reporting improper payments for the RRA and RUIA 

programs on July 19, 2018. RRB’s fiscal year 2020 RRA risk assessment determined that 

the program was under PIIA’s threshold of significant Improper payments. RRB’s fiscal 

year 2020 RUIA risk assessment concluded that, through fiscal year 2019, there were no 

reported issues or problems regarding the RUIA program. In response to the enactment, 

in fiscal year 2020, of The Coronavirus Aid, Relief, and Economic Security Act, which 

directly affects the payment of unemployment and sickness benefits, the RRB will report 

the results of its RUIA improper payment analysis in the Payment Integrity section of the 

fiscal year 2021 PAR.

 RRB reported an improper payment estimate for Railroad Medicare in the fiscal year 

2018 PAR. Therefore, continued reporting of its annual improper payment estimates 

was required and a risk assessment was not required. However, RRB ceased reporting 

Railroad Medicare improper payment data beginning with the fiscal year 2019 PAR; and

 RRB’s risk assessments deemed the non-benefit paying programs, vendor and employee 

payment programs, not susceptible to significant improper payments in its fiscal year 

2017 and 2020 PAR reporting.

If required, federal agencies should conduct a program specific risk assessment for each 

program or activity that conforms with section 2(B) of the [PIIA].

16 For programs that are 

deemed to be not susceptible to significant improper payments, agencies are required to 

perform risk assessments at least once every three years. Programs already reporting an 

improper payment estimate do not need to perform an additional improper payment risk 

assessment.

 16 31 U.S.C. § 3351.
OFFICE OF INSPECTOR GENERAL - RAILROAD RETIREMENT BOARD

RRB’s Noncompliance with Improper Payments Reporting - Report No. 21-05 13

Requirements #3 through #6 – RRB did not Publish an IP Estimate, a Corrective 

Action Plan, or a Reduction Target, or Report an IP Rate of Less than 10 Percent 

for Railroad Medicare

The RRB did not publish payment integrity information or improper payment data for Railroad 

Medicare in its PAR or as accompanying information in its data call submissions. Therefore, the 

RRB was noncompliant with requirements three through six. To comply with:

 Requirement #3 – Publish an Improper Payment Estimate, federal agencies must publish 

improper payments estimates for all programs and activities identified under section 

2(C) of the PIIA in the accompanying materials to the annual financial statement;

 Requirement #4 – Publish a Corrective Action Plan, federal agencies must publish 

programmatic corrective action plans prepared under section 2(D) of the PIIA in the 

accompanying materials to the annual financial statement; and

 Requirement #5 – Publish and Meet Annual Reduction Targets, federal agencies must 

publish improper payments reduction targets established under section 2(E) of the PIIA

for each program assessed to be at risk, and meet such targets; and

 Requirement #6 – Report a Gross Improper Payment Rate of Less than 10 Percent, 

federal agencies are required to report a gross improper payment rate of less than 

10 percent for each program and activity for which an estimate was published under 

section 2(F) of the PIIA.

17

The current version of OMB Circular A-136 also states that “beginning with FY 2020 AFR/PAR 

reporting, information previously contained in this section that is not explicitly required below 

will be reported on https:/paymentaccuracy.gov/ through the annual OMB payment integrity 

data call." 

PIIA noncompliance with requirements 3 through 6 is directly attributable to RRB’s decision to 

cease Railroad Medicare reporting as of fiscal year 2019. RRB ceased reporting Railroad 

Medicare improper payment data because CMS reports a combined overall error rate that 

includes all Medicare Administrative Contractors and the RRB SMAC. CMS and RRB agreed that 

RRB would no longer separately report this information in order to avoid reporting duplicative 

information. RRB management has stated that there was no change in their rationale for not 

reporting a Railroad Medicare improper payment rate for fiscal year 2020. While assessed as 

duplicative, we observed that the Railroad Medicare improper payment rate was not 

transparently disclosed in the HHS’ or CMS’ AFRs.

RRB should be reporting Railroad Medicare improper payment data because OMB did not 

formally grant the RRB approval to discontinue reporting Railroad Medicare. The OMB 

indicated that the RRB and CMS should resolve this issue amongst themselves. RRB and CMS 

have not formalized an agreement for reporting Railroad Medicare as they continue to work on 

updating an MOU between the agencies. Although the MOU was expected to be finalized by 

the end of 2020, RRB management explained that actions have been postponed due to CMS’ 

 17 31 U.S.C. § 3351.
OFFICE OF INSPECTOR GENERAL - RAILROAD RETIREMENT BOARD

RRB’s Noncompliance with Improper Payments Reporting - Report No. 21-05 14

administrative changes and its shifting of resources to address coronavirus activities. RRB 

management stated that the meetings are expect to resume in fiscal year 2021. Until the MOU 

is finalized, RRB’s position was that they have a tentative agreement with CMS that Railroad 

Medicare reporting responsibilities belonged to CMS.

While below PIIA’s established 10 percent threshold, RRB’s improper payment rate of 

9.3 percent determined during its November 2019 Comprehensive Error Rate Testing was not 

reported in its PAR or data call submissions. Because the rate was not published in its PAR, we 

determined that they were noncompliant for requirements 3 and 6. 

Railroad Medicare improper payment estimates, corrective action plans, annual reduction 

targets, and improper payment rates are not being reported to OMB as required by PIIA, and it 

is RRB’s responsibility to continue publishing this required improper payment information until 

the RRB and HHS sign a memorandum of understanding detailing who is responsible for 

Railroad Medicare reporting. As such, the RRB did not disclose to the public, the President, and 

Congress the following information about the Railroad Medicare program and the performance 

of the RRB’s SMAC, Palmetto:

 The RRB had $81.2 million in projected Railroad Medicare improper payments.

 The RRB did not have a Railroad Medicare corrective action plan to reduce the prior 

year’s improper payment rate. The prior year’s rate was 12.5 percent but was

unpublished by the RRB in its fiscal year 2019 PAR, if published this would have 

triggered the need for a corrective action plan.

 The RRB did not publish a Railroad Medicare improper payment annual reduction target

for this year. 

 The RRB had an unpublished and unreported gross improper payment rate of 

9.3 percent, below the 10 percent threshold.

18

At the time of this report, the RRB had been noncompliant for three consecutive fiscal years.

Recommendations

Our prior year audit recommendation addressed these weaknesses and remained open.19 In 

addition, we recommend that the Office of Programs

2. publish improper payment estimates for the Railroad Medicare Program in the Office of 

Management and Budget's data calls, until the Office of Management and Budget

formally approves the Railroad Retirement Board’s discontinuation of reporting or 

approves an agreement between the Centers for Medicare and Medicaid Services and 

the Railroad Retirement Board on how Railroad Medicare will be reported;

 18 The information provided is according to a CMS’ Comprehensive Error Rate Testing report titled November 2019

Final Report For Contractor RRB. The report included reviewed claims data from the sampling period July 2017

through June 2018. 19 RRB OIG, Report No. 20-06, Recommendation 1.
OFFICE OF INSPECTOR GENERAL - RAILROAD RETIREMENT BOARD

RRB’s Noncompliance with Improper Payments Reporting - Report No. 21-05 15

3. develop and publish corrective action plan information in accordance with OMB 

directives;

4. publish reduction targets for the Railroad Medicare Program in accordance with the 

annual Office of Management and Budget Data Call requirements;

5. meet the published reduction targets for the Railroad Medicare Program; and

6. report an improper payment rate of less than 10 percent for the Railroad Medicare 

program in accordance with applicable laws and regulations.

Management’s Comments and Our Response

The Office of Programs did not concur with recommendations two through six. Their response 

was the same as their response to recommendation one. Our evaluation of their comments is 

also the same. Please refer to our comments for that recommendation.

RRB’s Payment Integrity Data Call Reporting was Incomplete and 

Inaccurate

The RRB’s payment integrity reporting in its annual data calls and supplemental data calls was 

incomplete and therefore inaccurate. The RRB did not comply with OMB’s Annual Data 

Call requirements because it did not complete tables 1, 2, and 4 for the Railroad 

Medicare Program:

 Table 1 includes prior and current year information detailing program outlays, improper 

payment amounts and rates, over and under payments and rates, monetary and nonmonetary losses, loss control, out year projections, and sampling information. 

 Table 2 reports improper payments by amount and root cause category. 

 Table 4 reports information on overpayments recaptured outside of payment recapture 

audits, overpayments recaptured through payment recapture audits, disposition of 

funds recaptured through payment recapture audit programs, and aging of outstanding 

overpayments identified in payment recapture audit programs.

In addition, the RRB did not fully complete and publish OMB's fiscal year 2020 

supplemental data call requirements as required. RRB either did not answer or 

insufficiently answered 14 of 16 supplemental data call questions. Of the 16, RRB did not 

respond to any of the 6 threshold determined questions and 5 of 10 additional required 

supplemental data call questions applicable to the Railroad Medicare program. RRB also 

failed to provide any response to 8 of 10 required supplemental data call questions for 

both the vendor and employee payment programs. 

The supplemental data call questions that were not fully completed were designed to 

capture the following program improper payment information:

 Annual Performance Appraisal Criteria.

 Excluded Programs.

 Improper Payment Rate Reduction.
OFFICE OF INSPECTOR GENERAL - RAILROAD RETIREMENT BOARD

RRB’s Noncompliance with Improper Payments Reporting - Report No. 21-05 16

 Tolerable Rate.

 Internal Controls, Human Capital, Information Systems and Other Infrastructure and

Program Needs.

 Corrective Actions Taken.

 Corrective Actions to Be Taken.

 Inspector General Compliance.

 Bringing the Program into Compliance.

 Creating Accountability to Achieve Compliance.

 Do Not Pay Initiative.

OMB’s data call instructions required RRB to complete and publish the following tables as 

accompanying materials:

 Table 1: Improper Payment Reduction Outlook is required for each agency that has 

programs or activities reporting improper payments. 

 Table 2: Improper Payment Root Cause Categories is required for each agency that has 

programs and activities reporting under OMB Circular A-123 Appendix C Part I.D 

regardless of whether the program or activity has improper payments exceeding the 

statutory thresholds.

 Table 4: Payment Recapture Reporting must include each program or activity that 

expends $1 million or more annually and either conducts a payment recapture audit, 

and/or recaptures payments outside of a payment recapture audit. 

OMB’s supplemental data call instructions required RRB to publish responses to the OMB’s 

supplemental data call questions as accompanying materials.

OMB developed 16 supplemental data call questions for fiscal year 2020. Questions 1, 7, 8, 

9, 10, and 11 must be answered for each program or activity as determined under OMB 

Circular A-123, Appendix C, Part I.D with improper payments exceeding the statutory 

thresholds listed in OMB Circular A-123, Appendix C, Part I.B. Questions 2, 3, 4, 5, and 6 

should be answered at an agency level by all agencies regardless of programmatic 

reporting. Questions 12, 13, 14, 15, and 16 should be answered by all programs or 

activities. 

The RRB, through its contractor, paid $873.4 million in Railroad Medicare Part B claims on 

behalf of its beneficiaries during fiscal year 2019, but did not complete table 1, 2 or 4 for 

the Railroad Medicare program because it believes Railroad Medicare improper payment 

information is being reported by HHS and CMS.

According to the RRB, it ceased reporting Railroad Medicare improper payment data 

because CMS reports a combined overall error rate that includes all Medicare 

Administrative Contractors and the RRB SMAC. As such, CMS and RRB agreed that RRB 

would no longer separately report this information to avoid reporting duplicative 

information. 
OFFICE OF INSPECTOR GENERAL - RAILROAD RETIREMENT BOARD

RRB’s Noncompliance with Improper Payments Reporting - Report No. 21-05 17

However, the RRB should be reporting Railroad Medicare improper payment data because 

OMB did not formally grant the RRB approval to discontinue reporting Railroad Medicare.

OMB indicated that the RRB and CMS should resolve this issue amongst themselves. RRB 

and CMS have not formalized an agreement for reporting Railroad Medicare as they 

continue to work on updating an MOU between the agencies.

The RRB did not provide sufficient responses for Railroad Medicare because they 

discontinued improper payment reporting for the program, as discussed above. 

The RRB only provided responses to two questions for the vendor and employee payment 

programs and did not respond to the remaining eight applicable questions.

Due to RRB’s insufficient responses, OMB will not receive the information needed to 

properly evaluate, monitor and provide oversight over the Railroad Medicare program. 

RRB’s failure to properly respond to OMB data call questions does not allow the OMB 

to provide sufficient oversight over the RRB's improper payments and evaluate RRB's 

efforts in preventing, reducing, correcting and recovering improper payments. Also, 

the lack of required information could prevent OMB from aligning the necessary 

resources required to more effectively manage improper payments.

Recommendation

We recommend that the Office of Programs 

7. fully complete and publish all required payment integrity information as requested by 

the Office of Management and Budget’s annual and supplemental data calls, until it 

formalizes an agreement with the Centers for Medicare and Medicaid Services to take 

over reporting for Railroad Medicare.

Management’s Comments and Our Response

The Office of Programs did not concur with recommendation seven. Their response was the 

same as their response to recommendation one. Our evaluation of their comments is also the 

same. Please refer to our comments for that recommendation.

Additional Reporting Required in Statute

As part of this audit, we evaluated the agency’s additional reporting as required in the 

OMB data calls and OMB M-18-20. We determined that some of the RRB’s additional required 

reporting was missing. We discussed our findings in reference to improper payment barriers, 

improper payment accountability, information systems and other infrastructure in the sections 

below.
OFFICE OF INSPECTOR GENERAL - RAILROAD RETIREMENT BOARD

RRB’s Noncompliance with Improper Payments Reporting - Report No. 21-05 18

Information on Railroad Medicare Improper Payment Barriers, Accountability, 

Information Systems, and Other Infrastructure was Missing

RRB did not describe specific performance appraisal criteria for its employees to 

reduce improper payments for the Railroad Medicare Program in its fiscal year 2020 

PAR or its OMB supplemental data call submission. RRB also did not describe whether 

the RRB has the internal controls, human capital, information systems, and other 

infrastructure it needs to reduce improper payments to the levels the agency has 

targeted, or if it has the additional program resources needed to reduce improper 

payments to the levels the RRB has targeted, for the Railroad Medicare program. We 

previously reported this issue in our 2018 and 2019 improper payment compliance audit 

and our recommendations from the 2018 audit remain open.20

Per OMB 2020 supplemental data call Question 1: Annual Performance Appraisal Criteria,

each program or activity with improper payments exceeding the statutory thresholds must 

describe the steps the program has taken and plans to take, including the timeline, to 

ensure that agency managers including the agency head, accountable officers, program 

official/owner, and States and localities where appropriate are held accountable for 

reducing and recapturing improper payments through annual performance appraisal 

criteria for each of the following:

 Meeting applicable improper payments reduction targets;

 Preventing improper payments from being made; and

 Promptly detecting and recovering improper payments that are made.21

Per OMB 2020 supplemental data call Question 9: Internal Controls, Human Capital, 

Information Systems and other Infrastructure and Program Needs, RRB must answer 

whether the program has the internal controls, human capital, information systems, and 

other infrastructure it needs to reduce improper payments to the levels the agency has 

targeted, and indicate additional program needs to reduce improper payments to the 

levels the program has targeted.

22

The RRB did not report this information due to their belief concerning duplicate improper 

payment reporting of the Railroad Medicare program in HHS’ AFR. RRB management 

believes that HHS should be and has been reporting Railroad Medicare information rather 

than the RRB. As a result, information on Railroad Medicare accountability, information 

systems, and other infrastructure has not been reported. The estimated Railroad Medicare 

improper payments of $81.2 million reported as of November 2019 exceeded the OMB’s 

threshold of 1.5 percent of the program’s outlays and the established OMB threshold 

amount of $10 million.

 20 RRB OIG, Report No. 19-09, Recommendations 15 and 16. 21 31 U.S.C. §3352(d)(5)(A) and (B)) each program or activity under OMB Circular A-123, Appendix C, Part I.D with 

improper payments exceeding the statutory thresholds listed in OMB Circular A-123, Appendix C, Part I.B. 22 31 U.S.C. §3352(d)(2)(A) through (C)3352(d)(3)) under OMB Circular A-123, Appendix C, Part I.D with improper 

payments exceeding the statutory thresholds listed in OMB Circular A-123, Appendix C, Part I.B.
OFFICE OF INSPECTOR GENERAL - RAILROAD RETIREMENT BOARD

RRB’s Noncompliance with Improper Payments Reporting - Report No. 21-05 19

Without implemented annual performance appraisal criteria, Railroad Medicare program 

officials will not be held accountable for reducing and recapturing improper payments. In 

addition, not reporting the internal controls, human capital, information system and 

infrastructure, and other needed resources will make it more difficult for OMB to provide 

RRB with the tools and resources needed to reduce Railroad Medicare improper payments.

Recommendation

We recommend that the Office of Programs

8. describe in its Performance and Accountability Report or Office of Management and 

Budget supplemental data call submission, the internal controls, human capital, its 

information systems and infrastructure needs, as well as its other program needs for 

reducing Railroad Medicare improper payments to the targeted levels, in accordance 

with OMB’s supplemental data call requirements.

Management’s Comments and Our Response

The Office of Programs did not concur with recommendation eight. Their response was the 

same as their response to recommendation one. Our evaluation of their comments is also the 

same. Please refer to our comments for that recommendation.

Other Observations

While conducting this audit, we made other observations regarding transparency of 

data. We describe the details of our observation in the next sections.

Railroad Medicare Improper Payment Data is Not Transparent in HHS’ Fiscal 

Year 2020 Agency Financial Report

Railroad Medicare improper payment information was not separately published in 

HHS’ or CMS’ AFR or on www.paymentaccuracy.gov. Therefore, published Railroad 

Medicare information was not transparent. We reviewed HHS’ fiscal year 2020 AFR

and there was no mention of the RRB’s Railroad Medicare program as a separate 

program when discussing improper payment information. In addition, CMS’

fiscal year 2020 AFR made no mention of Railroad Medicare as a separate program in 

discussing Medicare improper payment information. Finally, there was no mention of 

Railroad Medicare for HHS or CMS on the fiscal year 2020 dataset on 

paymentaccuracy.gov. 

Railroad Medicare, should be considered as one program for improper payment reporting. 

Appendix C to OMB Circular No. A 123 requires that, “agencies should not put programs or 

activities into groupings that may mask significant improper payment rates by the large 

size or scope of a grouping.” 

The RRB does not report the improper payment rate or other required information for the 

Railroad Medicare program because it maintains that this would be duplicate reporting. 

They maintain that HHS includes this information in their PAR and it is CMS’ responsibility 
OFFICE OF INSPECTOR GENERAL - RAILROAD RETIREMENT BOARD

RRB’s Noncompliance with Improper Payments Reporting - Report No. 21-05 20

to report Railroad Medicare improper payment information. However, HHS only includes 

Railroad Medicare program improper payment information as part of their national Part B 

improper payment rate and does not report it or identify it separately. If RRB does not 

accept responsibility for Railroad Medicare reporting as required by PIIA and it is not 

reported as a unique program of risk elsewhere, there is no reason for RRB to retain its 

administrative responsibilities for the Railroad Medicare program.

The intent of OMB's guidance in Appendix C is to provide complete transparency of 

improper payment rates for programs an agency is responsible for overseeing and 

administering. For example, a significant improper payment error rate of a small 

program should not be concealed within a larger program that has a rate below the 

statutory threshold to allow the otherwise noncompliant smaller program to become 

compliant.

One of our previous audit reports addressed these weaknesses and those recommendations 

remained open.23

 23 RRB OIG, Report No. 19-09, Recommendations 9, 18, and 19.
OFFICE OF INSPECTOR GENERAL - RAILROAD RETIREMENT BOARD

RRB’s Noncompliance with Improper Payments Reporting - Report No. 21-05 21

APPENDIX I: MANAGEMENT COMMENTS
OFFICE OF INSPECTOR GENERAL - RAILROAD RETIREMENT BOARD

RRB’s Noncompliance with Improper Payments Reporting - Report No. 21-05 22
OFFICE OF INSPECTOR GENERAL - RAILROAD RETIREMENT BOARD

RRB’s Noncompliance with Improper Payments Reporting - Report No. 21-05 23
OFFICE OF INSPECTOR GENERAL - RAILROAD RETIREMENT BOARD

RRB’s Noncompliance with Improper Payments Reporting - Report No. 21-05 24
OFFICE OF INSPECTOR GENERAL - RAILROAD RETIREMENT BOARD

RRB’s Noncompliance with Improper Payments Reporting - Report No. 21-05 25

APPENDIX II: PREVIOUS OFFICE OF INSPECTOR GENERAL OPEN AUDIT 

RECOMMENDATIONS FOR IMPROPER PAYMENT REPORTING

Railroad Retirement Board

Office of Inspector General Audit Reports

Report Recommendation Status

15-06 Take all of the necessary steps to prepare and submit the 

required plans within the 90 day reporting requirement.

(Recommendation 1)

Open

15-06 Ensure that the necessary policies and procedures are 

developed and documented for the agency’s use for the 

preparation of a risk assessment process that meets Improper 

Payment Elimination and Recovery Act of 2010 requirements. 

(Recommendation 2)

Open

15-06 Revise and document their definitions of improper 

underpayments for the Railroad Retirement Act program in 

compliance with Improper Payment Elimination and Recovery 

Act of 2010 guidance, and if similar definitions are used for 

other programs, revise them accordingly. (Recommendation 6)

Open

15-06 Develop and document the necessary policies and procedures 

for the review and validation of the Railroad Unemployment 

Insurance Act improper payment data to be reported in the 

Performance and Accountability Report. (Recommendation 9)

Open

No corrective action taken 

due to disagreement 

between agency and 

Office of Inspector 

General (OIG) auditors 

regarding which unit 

within the agency this 

recommendation should 

be directed.

15-06 Ensure that the proper controls are in place to make sure that 

the policies and procedures are followed to properly support 

the improper payment data reported for the Railroad 

Unemployment Insurance Act program. (Recommendation 10)

Open

No corrective action taken 

due to disagreement 

between agency and OIG

auditors regarding which 

unit within the agency this 

recommendation should 

be directed.

16-07 Revise its overall process for the Railroad Retirement Act

program that supports improper payment reporting 

requirements to ensure the accuracy of the data. 

(Recommendation 1)

Open

Agency did not concur. 

OIG auditors believe this 

recommendation should 

still be implemented.

16-07 Document policies and procedures to ensure that entire 

receivable balances are recorded in the agency’s receivable 

system. (Recommendation 2)

Open
OFFICE OF INSPECTOR GENERAL - RAILROAD RETIREMENT BOARD

RRB’s Noncompliance with Improper Payments Reporting - Report No. 21-05 26

Railroad Retirement Board

Office of Inspector General Audit Reports

Report Recommendation Status

16-07 Revise its definitions of improper underpayments in the 

methodology used for the Railroad Unemployment Insurance 

Act program to ensure that it is in compliance with Improper 

Payment Elimination and Recovery Act of 2010 guidance.

(Recommendation 3)

Open

Agency did not concur. 

OIG auditors believe this 

recommendation should 

still be implemented.

17-05 Take the actions as required by Office of Management and 

Budget guidance in regard to noncompliance for third 

consecutive year for the same program to ensure that RRB 

programs for vendor payments and employee payments are 

brought into compliance. (Recommendation 1)

Open

Agency did not concur. 

OIG auditors believe this 

recommendation should 

still be implemented.

17-05 Revise its computation for application of improper payment 

percentages for the Railroad Retirement Act program 

associated with initial and post underpayments to ensure that 

they are separately applied to the applicable components in 

Railroad Retirement Board calculations of the total improper 

payments. (Recommendation 2)

Open

Agency did not concur. 

OIG auditors believe this 

recommendation should 

still be implemented.

18-05 Identify and post all existing unposted returned payments. 

(Recommendation 2)

Open

18-05 Identify the cause for unposted returned payments and take 

the necessary corrective actions to ensure the accuracy of 

future reported recaptured amounts.

(Recommendation 3)

Open

19-09 Submit a plan, within 90 days, to the Senate Committee on 

Homeland Security and Governmental Affairs, the House 

Committee on Oversight and Government Reform, and the 

Office of Management and Budget, describing the actions that 

the agency will take to become compliant. (Recommendation 

1)

Open

Agency did not concur. 

OIG auditors believe this 

recommendation should 

still be implemented.

19-09 Achieve a gross improper payment rate of less than 10 percent 

for Railroad Medicare. The Office of Programs through the 

Railroad Retirement Board’s Specialty Medicare 

Administrative Contractor should continue to work with 

Medicare providers to communicate the documentation 

requirements and monitor the adherence to such 

requirements throughout the year. (Recommendation 2)

Open

Agency did not concur. 

OIG auditors believe this 

recommendation should 

still be implemented.

19-09 Remove or update the navigation instructions to the 

Performance and Accountability Report. (Recommendation 3)

Open

19-09 Obtain and maintain the applicable Railroad Medicare 

sampling and estimation plan agency certification. It must be a 

Centers for Medicare and Medicaid Services’ certification, 

Railroad Retirement Board Chief Financial Officer’s 

certification, or other Railroad Retirement Board program 

official’s certification. (Recommendation 4)

Open

Agency did not concur. 

OIG auditors believe this 

recommendation should 

still be implemented.
OFFICE OF INSPECTOR GENERAL - RAILROAD RETIREMENT BOARD

RRB’s Noncompliance with Improper Payments Reporting - Report No. 21-05 27

Railroad Retirement Board

Office of Inspector General Audit Reports

Report Recommendation Status

19-09 Obtain the Railroad Medicare sampling and estimation plan 

for the fiscal year 2019 payment integrity reporting cycle. 

(Recommendation 5)

Open

Agency did not concur. 

OIG auditors believe this 

recommendation should 

still be implemented.

19-09 Establish a written policy to ensure subsequent Railroad 

Medicare sampling and estimation plans are obtained and 

readily available for review so that a qualified statistician 

would be able to replicate what was done or so that Office of 

Management and Budget, agency Inspector General, or 

Government Accountability Office personnel can evaluate the 

design. (Recommendation 6)

Open

Agency did not concur. 

OIG auditors believe this 

recommendation should 

still be implemented.

19-09 Submit the Railroad Medicare sampling and estimation plan 

for fiscal year 2019 to the Office of Management and Budget 

by the June 30th deadline. (Recommendation 7)

Open

Agency did not concur. 

OIG auditors believe this 

recommendation should 

still be implemented.

19-09 Obtain the Office of Management and Budget approval for 

Railroad Medicare’s overall reduction target rate. 

(Recommendation 8)

Open

Agency did not concur. 

OIG auditors believe this 

recommendation should 

still be implemented.

19-09 Update the Memorandum of Understanding (MOU13-61) to 

describe the applicable agency responsibilities as they pertain 

to Improper Payments Elimination and Recovery Act laws and 

Office of Management and Budget guidance for payment 

integrity reporting. (Recommendation 9)

Open

Agency did not concur. 

OIG auditors believe this 

recommendation should 

still be implemented.

19-09 Include a brief narrative of the reduction in improper 

payments that is attributable to the Do Not Pay Initiative for 

Railroad Medicare and associated systems. (Recommendation 

10)

Open

Agency did not concur. 

OIG auditors believe this 

recommendation should 

still be implemented.

19-09 Identify, publish, and provide a justification for Railroad 

Medicare uncollectible amounts. (Recommendation 11)

Open

Agency did not concur. 

OIG auditors believe this 

recommendation should 

still be implemented.

19-09 Provide justification for Railroad Retirement Act and Railroad 

Unemployment Insurance Act uncollectible amounts. 

(Recommendation 12)

Open
OFFICE OF INSPECTOR GENERAL - RAILROAD RETIREMENT BOARD

RRB’s Noncompliance with Improper Payments Reporting - Report No. 21-05 28

Railroad Retirement Board

Office of Inspector General Audit Reports

Report Recommendation Status

19-09 Develop a payment recapture audit program for vendor and 

employee payments, or approved alternative method, if one is 

deemed cost effective. (Recommendation 13)

Open

19-09 If a payment recapture audit program is deemed not cost 

effective, provide a cost benefit analysis, in accordance with 

the Office of Management and Budget's best practices as 

outlined in OMB M-18-20, in writing to Office of Management 

and Budget and the Office of Inspector General, and include it 

in the fiscal year 2019 Performance and Accountability Report. 

(Recommendation 14)

Open

19-09 Adopt the Office of Management and Budget’s recommended 

best practice and describe statutory or regulatory barriers in 

the fiscal year 2019 Performance and Accountability Report. 

(Recommendation 15)

Open

Agency did not concur. 

OIG auditors believe this 

recommendation should 

still be implemented.

19-09 Update applicable performance appraisals with specific criteria 

for meeting applicable improper payment reduction targets 

and establish and maintain sufficient internal controls to 

reduce improper payments in accordance with Office of 

Management and Budget Circular A-136. (Recommendation 

16)

Open

Agency did not concur. 

OIG auditors believe this 

recommendation should 

still be implemented.

19-09 Develop and implement an internal control process (e.g. a 

checklist) to ensure all updates to OMB M-18-20 and Office of 

Management and Budget Circular A-136 relating to improper 

payments are sufficiently addressed for payment integrity 

reporting. (Recommendation 17)

Open

Agency did not concur. 

OIG auditors believe this 

recommendation should 

still be implemented.

19-09 Work with the Centers for Medicare and Medicaid Services to 

meet the needs of Railroad Retirement Board’s payment 

integrity reporting. If the Railroad Retirement Board is not able 

to obtain claims data that coincides with the fiscal year being 

reported, obtain Office of Management and Budget’s approval 

for the delayed reporting timeframe. (Recommendation 18)

Open

Agency did not concur. 

OIG auditors believe this 

recommendation should 

still be implemented.

19-09 Update the Memorandum of Understanding (MOU13-61) 

dated April 12, 2013 to ensure it reflects the applicable agency 

responsibilities as they pertain to improper payment reporting 

sampling and estimation plans. (Recommendation 19)

Open

Agency did not concur. 

OIG auditors believe this 

recommendation should 

still be implemented.
OFFICE OF INSPECTOR GENERAL - RAILROAD RETIREMENT BOARD

RRB’s Noncompliance with Improper Payments Reporting - Report No. 21-05 29

Railroad Retirement Board

Office of Inspector General Audit Reports

Report Recommendation Status

20-06 Create and submit proposals to Office of Management and 

Budget during their next budget submission that will bring the 

agency into compliance. If the Director of Office of 

Management and Budget determines that additional funding 

would help the agency become compliant, the agency should 

obligate an amount of additional funding determined by the 

Director of Office of Management and Budget to intensify 

compliance efforts. (Recommendation 1)

Open

Agency did not concur. 

OIG auditors believe this 

recommendation should 

still be implemented.

20-06 Update the corrective action plan that was published in the 

Railroad Retirement Board’s fiscal year 2018 Performance and 

Accountability Report to reduce Railroad Medicare improper 

payments and publish it in the Railroad Retirement Board’s 

fiscal year 2020 Performance and Accountability Report. 

(Recommendation 2)

Open

Agency did not concur. 

OIG auditors believe this 

recommendation should 

still be implemented.

20-06 Publish Railroad Medicare overpayment recapture data in the 

Railroad Retirement Board’s fiscal year 2020 Performance and 

Accountability Report. (Recommendation 3)

Open

Agency did not concur. 

OIG auditors believe this 

recommendation should 

still be implemented.

20-06 Perform a reconciliation of Railroad Retirement Act 

overpayments recapture source data to the Financial 

Management Integrated System when preparing the payment 

recapture data worksheet to ensure accurate information is 

published in the Railroad Retirement Board’s Performance and 

Accountability Report’s payment integrity section. 

(Recommendation 4)

Open

20-06 Resume payment integrity reporting in the Railroad 

Retirement Board’s performance and accountability report, as 

required by applicable improper payment laws, until official 

approval from Office of Management and Budget is obtained 

and updated governing documents between the Railroad 

Retirement Board and the Department of Health and Human 

Services have been signed to reflect the extended enterprise 

relationship between the two agencies. (Recommendation 5)

Open

Agency did not concur. 

OIG auditors believe this 

recommendation should 

still be implemented.

Source: RRB OIG analysis of open recommendation related to payment integrity reporting.
OFFICE OF INSPECTOR GENERAL - RAILROAD RETIREMENT BOARD

RRB’s Noncompliance with Improper Payments Reporting - Report No. 21-05 30

APPENDIX III: ABBREVIATIONS

AFR Agency Financial Report

CERT Comprehensive Error Rate Testing

CMS Centers for Medicare and Medicaid Services

ERM Enterprise Risk Management

HHS U.S. Department of Health and Human Services

IG Inspector General

IPERA Improper Payments Elimination and Recovery Act of 2010

IPERIA Improper Payments Elimination and Recovery Improvement Act of 2012

MOU Memorandum of Understanding

OIG Office of Inspector General

OMB Office of Management and Budget

PAR Performance and Accountability Report

PIIA Payment Integrity Information Act of 2019

RRA Railroad Retirement Act

RRB Railroad Retirement Board

RUIA Railroad Unemployment Insurance Act

SMAC Specialty Medicare Administrative Contractor