Government Efficiency and Effectiveness: Opportunities to Reduce Fragmentation, Overlap, Duplication, and Improper Payments and Achieve Other Financial Benefits
Published: 2015-03-04T00:00:00

Fast Facts:

Highlights:
section_title: Why GAO Did This Study
paragraphs: As the fiscal pressures facing the government continue, so too does the need for executive branch agencies and Congress to improve the efficiency and effectiveness of government programs and activities. Such opportunities exist throughout the government. GAO reports annually to Congress on federal programs, agencies, offices, and initiatives (both within departments and government-wide) that are fragmented, overlapping, or duplicative as well as opportunities for cost savings or enhanced revenues. One area that GAO has highlighted as offering the potential for significant cost savings is improper payments, which are payments that should not have been made or were made in the incorrect amount.
This statement discusses the status of (1) actions taken and remaining opportunities to address fragmentation, overlap, and duplication issues, and achieve other financial benefits as identified in GAO's 2011-2014 annual reports; and (2) efforts to address government-wide improper payment issues. GAO reviewed and updated prior work and recommendations on issues of fragmentation, overlap, duplication, cost savings, and improper payments. GAO also reviewed reports of inspectors general and agency financial reports.
section_title: What GAO Found
paragraphs: The executive branch and Congress have made progress in addressing the approximately 440 actions across 180 areas that GAO identified in its past annual reports. These issues span the range of government services and programs, from the Medicare and Medicaid programs to transportation programs to weapon systems acquisitions. As of November 19, 2014, 29 percent of these actions were addressed, 44 percent were partially addressed, and 22 percent were not addressed. Executive branch and congressional efforts to address these actions over the past 4 years resulted in over $20 billion in financial benefits, with about $80 billion more in financial benefits anticipated in future years. Although progress has been made, fully addressing all the remaining actions identified in GAO's annual reports could lead to tens of billions of dollars of additional savings, with significant opportunities for improved efficiencies, cost savings, or revenue enhancements in the areas of defense, information technology, education and training, health care, energy, and tax enforcement. Sustained leadership by Congress and the executive branch is necessary to achieve this goal.
Efforts to reduce improper payments could result in significant cost savings. For the first time in recent years, the government-wide improper payment estimate significantly increased—to $124.7 billion in fiscal year 2014, up from $105.8 billion in fiscal year 2013. This increase of almost $19 billion was primarily due to estimates for Medicare, Medicaid, and the Earned Income Tax Credit, which account for over 76 percent of the government-wide estimate.
section_title: What GAO Recommends
paragraphs: GAO has made numerous recommendations that, if effectively implemented, could improve program management and help reduce improper payments in these programs. Examples include improving the use of prepayment edits in Medicare and requiring states to audit Medicaid payments to and by managed care organizations. Recent laws and guidance have focused attention on the issue of improper payments. For example, the Improper Payments Elimination and Recovery Improvement Act of 2012 enacted into law elements of the Do Not Pay initiative, which is a web-based, centralized data matching service that could help prevent improper payments. However, agencies continue to face challenges, such as statutory limitations and compliance issues, in reducing improper payments.

section_title: Letter
paragraphs: The federal government faces an unsustainable long-term fiscal path.  Changing this path will require difficult fiscal policy decisions to alter both  long-term federal spending and revenue. However, in the near-term,  executive branch agencies and Congress can act to improve the  efficiency and effectiveness of government programs and activities.  Opportunities to take action exist in areas where federal programs or  activities are fragmented, overlapping, or duplicative. We annually identify  and report on these opportunities as well as those to achieve other cost  savings or enhanced revenues. One area that we have highlighted as  offering the potential for significant cost savings is improper payments.  The federal government is accountable for how its agencies and grantees  spend hundreds of billions of taxpayer dollars annually, including  safeguarding against improper payments and establishing mechanisms to  recover those funds when overpayments occur.
My testimony today describes (1) the status of actions taken by the  administration and Congress to address the more than 400  recommendations we identified in our annual reports from 2011 through  2014 on fragmentation, overlap, duplication, cost savings, and revenue  enhancement, and (2) actions needed to address government-wide  improper payments, most recently estimated to be over $124 billion. My  comments are primarily based on our four annual reports and related  testimonies, as well as our high-risk update and recent work on improper  payments and analysis of agency financial reports and reports of  inspectors general (IG). These products include detailed explanations of the methods used to conduct our work. In February 2015, we also  updated our work on programs noncompliant with reporting requirements  for improper payments. We conducted the work that informs this  testimony 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.
subsections: section_title: Sustained Attention Is Critical for Addressing Fragmentation, Overlap, and Duplication and Achieving Other Financial Benefits
paragraphs: In our four annual reports issued from 2011 through 2014, we identified  over 180 areas with approximately 440 actions that the executive branch  and Congress could take to address fragmentation, overlap, and  duplication; achieve other cost savings; or enhance revenue. Figure 1  outlines the definitions we use for fragmentation, overlap, and duplication.  Although it may be appropriate for multiple agencies or entities to be  involved in the same programmatic or policy area due to the nature or  magnitude of the federal effort, the instances of fragmentation, overlap, or  duplication that we include in our annual reports are in areas where  multiple programs and activities may be creating inefficiencies.
We consider programs or activities to be fragmented when more than one  federal agency (or more than one organization within an agency) is  involved in the same broad area of national need, which may result in  inefficiencies in how the government delivers services. We have identified  fragmentation in multiple programs we reviewed. For example, in our  2014 annual report, we reported that the Department of Defense (DOD)  does not have a consolidated agency-wide strategy to contract for health  care professionals, resulting in a contracting approach that is largely  fragmented. Although some of the military departments attempted to  consolidate their health care staffing requirements through joint-use  contracts, such contracts only accounted for approximately 8 percent of  the $1.14 billion in obligations for health care professionals in fiscal year  2011. Moreover, in May 2013 we identified several instances in which a  single military department awarded numerous task orders for the same  type of health care professional in the same area or facility. For example,  we identified 24 separate task orders for contracted medical assistants at  the same military treatment facility. By not consolidating its requirements,  this facility missed the opportunity to achieve potential cost savings and  other efficiencies.
Fragmentation also can be a harbinger of overlap or duplication. Overlap  occurs when multiple agencies or programs have similar goals, engage in  similar activities or strategies to achieve them, or target similar  beneficiaries. We found overlap among federal programs or initiatives in a  variety of areas, including housing assistance. In particular, in our 2012  annual report, we reported that 20 different entities administered 160  programs, tax expenditures, and other tools that supported  homeownership and rental housing in fiscal year 2010. In addition, we  identified 39 programs, tax expenditures, and other tools that provided  assistance for buying, selling, or financing a home and 8 programs and  tax expenditures that provide assistance to rental property owners. We  found overlap in products offered and markets served by the Department  of Agriculture’s (USDA) Rural Housing Service and the Department of  Housing and Urban Development’s Federal Housing Administration,  among others. In August 2012, we questioned the need for maintaining  separate programs for rural areas.
In other areas, we found evidence of duplication, which occurs when two  or more agencies or programs engage in the same activities or provide  the same services to the same beneficiaries. For example, we reported in  2013 that a total of 31 federal departments and agencies invested billions  of dollars to collect, maintain, and use geospatial information— information linked to specific geographic locations that supports many  government functions, such as maintaining roads and responding to  natural disasters. We found that federal agencies had not effectively  implemented policies and procedures that would help them identify and  coordinate geospatial data acquisitions across the government. As a  result, we found that agencies made duplicative investments and risk  missing opportunities to jointly acquire data and save millions of dollars.
In addition, opportunities exist to reduce the cost of government  operations or enhance revenue collections. For example, our body of  work has raised questions about whether DOD’s efforts to reduce  headquarters overhead will result in meaningful savings. In 2013, the  Secretary of Defense directed a 20 percent cut in management  headquarters spending throughout DOD, to include the combatant  commands and service component commands. However, our work found  that mission and headquarters-support costs for the five geographic  combatant commands and their service component commands we  reviewed more than doubled from fiscal years 2007 through 2012, to  about $1.7 billion. We recommended that DOD more systematically  evaluate the sizing and resourcing of its combatant commands. If the  department applied the 20 percent reduction in management  headquarters spending to the $1.7 billion DOD used to operate and  support the five geographic combatant commands in fiscal year 2012, we  reported that DOD could achieve up to an estimated $340 million in  annual savings.
In our 2013 report, we reported that refining return-on-investment  measures could improve how the Internal Revenue Service (IRS)  allocates enforcement resources (subject to other considerations, such as  minimizing compliance costs and ensuring equitable treatment of  taxpayers). Our work illustrated that a small shift in existing resources— from examinations of less productive groups of tax returns to more  productive groups—could potentially increase enforcement revenue by  more than $1 billion. In addition, in our 2011 annual report, we identified  opportunities for improving the Department of the Interior’s management  of federal oil and gas resources. In particular, increasing the diligent  development of federal lands and waters leased for oil and gas  exploration and production and considering adjustments to Interior’s  royalty rates to a level that would ensure the government a fair return,  among other actions, could result in approximately $2 billion in revenues  over 10 years.
subsections: section_title: Executive Branch and Congress Continued to Make Progress in Addressing Previously Identified Issues
paragraphs: We found that the executive branch agencies and Congress have made  progress in addressing the actions identified in our 2011–2014 annual  reports. As shown in table 1, of the approximately 440 actions needed in  these areas, 135 (29 percent) were addressed, 202 (44 percent) were  partially addressed, and 103 (22 percent) were not addressed as of  November 2014.
Examples of progress made include DOD and Congressional actions to  reduce DOD’s fragmented approach for acquiring combat uniforms. In  2013, we found that DOD’s fragmented approach could lead to increased  risk on the battlefield for military personnel and increased development  and acquisition costs. In response, DOD developed and issued guidance  on joint criteria that will help to ensure that future service-specific  uniforms will provide equivalent levels of performance and protection. In  addition, a provision in the National Defense Authorization Act for Fiscal  Year 2014 established as policy that the Secretary of Defense shall  eliminate the development and fielding of service-specific combat and  camouflage utility uniforms in order to adopt and field common uniforms  for specific environments to be used by all members of the armed forces.Subsequently, the Army chose not to introduce a new family of  camouflage uniforms into its inventory, in part, because of this legislation,  resulting in a cost avoidance of about $4.2 billion over 5 years.
In addition, progress has been made in addressing the proliferation of  certain programs. For example, the National Science and Technology  Council’s (NSTC) implemented our suggested actions to better manage  overlap across science, technology, engineering, and mathematics  (STEM) education programs. Specifically, NSTC released guidance to  agencies on how to align their programs and budget submissions with the  goals of NSTC’s 5-Year strategic plan for STEM education and on  developing evaluations for the programs. In addition, several programs  were eliminated or consolidated into new programs, with the total number  of STEM education programs dropping from 209 funded in fiscal year  2010 to 158 funded in 2012. The President’s fiscal year 2016 budget  proposes to further consolidate and eliminate 20 STEM programs across  eight agencies. These efforts help agencies better target resources  toward programs with positive outcomes and achieve the greatest impact  in developing a pipeline of future workers in STEM fields. As another  example, the Workforce Innovation and Opportunity Act, enacted in July  2014, includes provisions to strengthen the workforce development  system under which a variety of employment and training services are  provided to program participants. In particular, the law requires that states  develop a unified state plan that covers all designated core programs to  receive certain funding. States’ implementation of the requirement may  enable them to increase administrative efficiencies in employment and  training programs—a key objective of our prior recommendations on  employment and training programs.
We estimated that executive branch and congressional efforts to address  suggested actions resulted in roughly $20 billion in financial benefits from  fiscal years 2011 through 2014, with another approximately $80 billion in  additional benefits projected to be accrued through 2023. For example,  in our 2011 annual report, we stated that the ethanol tax credit would cost  about $5 billion in forgone revenues in 2011 and that Congress could  reduce annual revenue losses by addressing duplicative federal efforts  directed at increasing domestic ethanol production. To reduce these  revenue losses, we suggested that Congress consider whether revisions  to the ethanol tax credit were needed and suggested options to consider,  including allowing the credit for the volumetric ethanol excise tax (for fuel  blenders that purchase and blend ethanol with gasoline) to expire at the  end of 2011. Congress allowed the tax credit to expire at the end of 2011.
In our 2012 annual report, we presented options for adjusting the  Transportation Security Administration’s (TSA) passenger security fee—a  uniform fee on passengers of U.S. and foreign air carriers originating at  airports in the United States—to offset billions of dollars in civil aviation  security costs. The Bipartisan Budget Act of 2013 modifies the passenger  security fee from its current per enplanement structure ($2.50 per  enplanement with a maximum one-way-trip fee of $5.00) to a structure  that increases the passenger security fee to a flat $5.60 per one-way-trip,  effective July 1, 2014. Specifically, this legislation identifies $12.6 billion  in fee collections that, over a 10-year period beginning in fiscal year 2014  and continuing through fiscal year 2023, will contribute to deficit  reduction. Fees collected beyond those identified for deficit reduction  are available, consistent with existing law, to offset TSA’s aviation  security costs. This fee is expected to cover 43 percent of aviation  security costs beginning in fiscal year 2014, compared with the  approximately 30 percent offset under the previous fee structure.
Table 2 outlines a number of addressed actions that resulted in or are  expected to result in cost savings or enhanced revenue. We plan to  release an update on the status of all actions presented in our 2011–2014  reports in conjunction with our next annual report in April 2015.
section_title: Leadership Attention Is Required to Continue Progress on Previously Identified Actions
paragraphs: The executive branch agencies and Congress have made progress in  addressing some suggested actions, but many other actions require  leadership attention to ensure that they will be fully addressed. More  specifically, 68 percent of actions directed to Congress and 66 percent of  actions directed to executive branch agencies identified in our 2011–2014  annual reports remain partially addressed or not addressed. As illustrated  below, our work identified areas of fragmentation, overlap, or duplication  that spanned the range of government activities, along with opportunities  to address these issues. Without increased or renewed leadership focus,  opportunities will be missed to improve the efficiency and effectiveness of  programs and save taxpayer dollars.
subsections: section_title: Fragmentation, Overlap, and Duplication Opportunities
paragraphs: Our work on defense has highlighted opportunities to address overlapping  and potentially duplicative services that result from multiple entities  providing the same service, including the following examples:  Defense Satellite Control Operations: In our 2014 annual report, we  reported that DOD has increasingly had deployed dedicated satellite  control operations networks, as opposed to shared networks that support  multiple kinds of satellites. For example, at one Air Force base in 2013,  eight separate control centers operated satellites for 10 satellite  programs. Furthermore, the Air Force alone funded about $2.1 billion in   While dedicated networks can  fiscal year 2011 on satellite operations.offer some benefits to programs, they also can be more costly to maintain  and have led to fragmented and potentially duplicative networks that  require more infrastructure and personnel to manage as compared with  shared networks. We suggested that DOD take actions to improve its  ability to identify and then assess the appropriateness of a shared versus  dedicated satellite control system, which DOD has begun to address.
Electronic Warfare: We reported in 2011 that all four military services  in DOD had been separately developing and acquiring new airborne  electronic attack systems and that spending on new and updated  systems was projected to total more than $17.6 billion during fiscal  years 2007–2016. While the department has taken steps to better  inform its investments in airborne electronic attack capabilities, it has  yet to assess its plans for developing and acquiring two new  expendable jamming decoys to determine if these initiatives should be  merged. For example, in fiscal year 2015 one DOD decoy system is already in production, while DOD defines performance requirements  for another decoy system. Without an assessment for potential  duplication, DOD may preclude the timely identification and  prevention of unnecessary overlap between its systems.
Unmanned Aircraft Systems: We reported in 2012 that DOD’s cost  estimates for acquisition programs for unmanned aircraft systems  (UAS) and related systems exceeded $37.5 billion for fiscal years  2012–2016. We found that military service-driven requirements,  rather than an effective department-wide strategy, led to overlap in  DOD’s UAS capabilities, resulting in programs and systems being  pursued that have similar flight characteristics and mission  requirements. To reduce the likelihood of overlap and potential  duplication in DOD’s UAS portfolio, we suggested several actions to  DOD that have not been fully implemented. The overlap in current  UAS programs, as well as continued potential for overlap in future  programs, shows that DOD must do more to implement these actions.  Our analysis suggests that the potential for savings would be  significant, and with DOD’s continued commitment to UAS for meeting  strategic requirements, action is all the more imperative.
More broadly, we identified multiple weaknesses in the way DOD  acquires weapon systems and the actions that are needed to address  these issues, which we recently highlighted in our high-risk series  update. For example, further progress must be made in tackling the  incentives that drive the acquisition process and its behaviors, applying  best practices, attracting and empowering acquisition personnel,  reinforcing desirable principles at the beginning of programs, and  improving the budget process to allow better alignment of programs and  their risks and needs. Addressing these issues could help DOD improve  the returns on its $1.5 trillion investment in major weapon systems and  find ways to deliver capabilities for less than it has in the past.
The federal government plans to spend $79 billion on information  technology (IT) in fiscal year 2015. The magnitude of these expenditures  highlights the importance of avoiding duplicative investments to better  ensure the most efficient use of resources. Opportunities remain to  reduce duplication and the cost of government operations in critical IT  areas, many of which require agencies to work together to improve  systems, including the following examples:  Information Technology Investment Portfolio Management: To  better manage existing IT systems, the Office of Management and  Budget (OMB) launched the PortfolioStat initiative. PortfolioStat  requires agencies to conduct an annual, agency-wide review of their  IT portfolios to reduce commodity IT spending and demonstrate how  their IT investments align with their missions and business functions,  among other things. In 2014, we reported that while the 26 federal  agencies required to participate in PortfolioStat had made progress in  implementing OMB’s initiative, weaknesses existed in agencies’  implementation of the initiative, such as limitations in the Chief  Information Officers’ authority. As noted in our recent high-risk update,  we made more than 60 recommendations to improve OMB and  agencies’ implementation of PortfolioStat and provide greater  assurance that agencies will realize the nearly $6 billion in savings  they estimated they would achieve through fiscal year 2015.
Federal Data Centers: In 2014, we found that consolidating federal  data centers would provide an opportunity to improve government  efficiency and achieve cost savings and avoidances of about $5.3  billion by fiscal year 2017. Although OMB has taken steps to identify  data center consolidation opportunities across agencies, weaknesses  exist in the execution and oversight of the consolidation efforts. For  example, we previously reported that all 24 departments and agencies  in the Federal Data Center Consolidation Initiative had not yet  completed a data center inventory or the consolidation plans to  implement their consolidation initiative. It will continue to be important  for agencies to complete their inventories and implement their plans  for consolidation to better ensure continued progress toward OMB’s  planned consolidation, optimization, and cost-savings goals.
DOD and Department of Veterans Affairs (VA) Electronic Health  Records System: DOD and VA abandoned their plans to develop a  single electronic system for health records that both departments  would share. Although the departments’ 2008 study showed that over  97 percent of inpatient functional requirements were common to both  DOD and VA, they decided to pursue separate electronic health  record system modernization efforts. In February 2014, we reported  that the departments had based this decision on the assertion that  pursuing separate systems would be less expensive and faster than  the single, shared-system approach. However, they had not  supported this assertion with cost and schedule estimates that  compared the separate efforts with estimates for the single-system  approach. Through continued duplication of these efforts, the  departments may be incurring unnecessary system development and  operation costs and missing opportunities to support higher-quality  health care for servicemembers and veterans. The departments plan  to make the separate systems interoperable as required by law.
Given the federal government’s continued experience with failed and  troubled IT projects, coupled with the fact that OMB initiatives to help  address such problems have not been fully implemented, we added  improving the management of IT acquisitions and operations to our 2015  high-risk list. The federal information technology acquisition reforms  enacted in December 2014 reinforce a number of the actions that we  have recommended to address IT management issues. For example, the  law containing these reforms codifies federal data center consolidation,  emphasizing annual reporting on cost savings and detailed metric  reporting, and OMB’s PortfolioStat process, focusing on reducing  duplication, consolidation, and cost savings. If effectively implemented,  this legislation should improve the transparency and management of IT  acquisitions and operations across the government. Twenty-seven federal  agencies plan to spend about $58 billion—almost three-quarters of the  overall $79 billion budgeted for federal IT in fiscal year 2015—on the  operations and maintenance of legacy (i.e., steady-state) investments.  The significance of these numbers highlights the importance of ensuring  that OMB’s PortfolioStat and Data Center Consolidation initiatives meet  their cost-savings goals.
We identified several opportunities to help address the proliferation of  certain education and training programs and improve the delivery of  benefits, which the executive branch agencies and Congress have been  working to address. However, additional opportunities remain to more  effectively invest in education and training programs, including the  following examples:
Teacher Quality: Federal efforts to improve teacher quality led to the  creation and expansion of a variety of programs across the federal  government; however, there is no government-wide strategy to  minimize fragmentation, overlap, or duplication among these  programs. Specifically, in our 2011 annual report we identified 82  distinct programs designed to help improve teacher quality, either as a  primary purpose or as an allowable activity. Many of these programs  (administered across 10 federal agencies) shared similar goals. We  suggested that Congress could enact legislation to eliminate teacher  quality programs that are too small to evaluate cost-effectively or to  combine programs serving smaller target groups into a larger  program. In February 2015, the House Committee on Education and  Workforce reported the Student Success Act, H.R. 5. According to  House Report 114-24, H.R. 5 would consolidate most teacher quality  programs into a new flexible grant program. In addition, we suggested  that Congress could include legislative provisions to help the  Department of Education reduce fragmentation, such as by giving  broader discretion to the agency to move resources from certain  programs. In February 2015, the Senate Committee on Health,  Education, Labor, and Pensions reported the Strengthening Education  through Research Act, S. 227, which would authorize the Department  of Education to reserve and consolidate funds from Elementary and  Secondary Education Act programs to carry out high-quality  evaluations and increase the usefulness of those evaluations. These  bills, if enacted, could help eliminate some of the barriers to  educational program alignment and help invest scarce resources  more effectively.
Employment for Persons with Disabilities: In June 2012, we  reported on 45 programs administered by nine federal agencies that  supported employment for people with disabilities and found these  programs were fragmented and often provided similar services to  similar populations. OMB has worked with executive agencies to  propose consolidating or eliminating some of these programs. In  particular, three programs were eliminated in the Workforce  Innovation and Opportunity Act: the Veterans’ Workforce Investment  Program, administered by the Department of Labor, and the Migrant  and Seasonal Farmworker Program and Projects with Industry,  administered by the Department of Education. However, OMB has not  yet systematically looked across all agencies and programs—beyond  those already identified in the Departments of Education and Labor— for opportunities to streamline and improve service delivery, which  could help achieve greater efficiency and effectiveness.
Table 3 outlines these and other examples of opportunities for  consolidating or streamlining programs to better provide services.
Opportunities also exist to achieve cost savings or enhance revenue  collection. As with the opportunities to address fragmentation, overlap  and duplication, fully achieving these opportunities will require sustained  leadership by executive branch agencies and Congress. Examples of  these actions include rescinding unobligated funds, improving fiscal  oversight over Medicare and Medicaid, reducing contract spending  through strategic sourcing, and increasing tax revenue collections.
We reported in March 2013 that the Department of Energy (DOE) was not  actively considering any applications under the Advanced Technology  Vehicle Manufacturing loan program that was established to provide  loans for projects to produce more fuel-efficient passenger vehicles and   In our 2014 annual report, we suggested that unless  their components.DOE could demonstrate a demand for new loans and viable applications,  Congress might wish to consider rescinding all or part of the remaining  $4.2 billion in credit subsidy appropriations made available under this  program. Since our April 2014 annual report, DOE has not yet  demonstrated a demand for these loans that would substantially use the  remaining credit subsidy appropriations. The department received four  complete applications seeking a total of $945 million in loans, which  represents 5.7 percent of the program’s remaining $16.6 billion in loan  authority. DOE officials stated that the program anticipated issuing  conditional commitments for loans in fiscal year 2015. In January 2015,  the Savings, Accountability, Value, and Efficiency Act of 2015 was  introduced in the House of Representatives, and includes a provision to  rescind unobligated balances of funding for the program, including the  remaining credit subsidy appropriations.
Improving Fiscal Oversight of Medicare and Medicaid  Over the years, we identified a number of actions that have the potential  for sizable cost savings through improved fiscal oversight in the Medicare  and Medicaid programs. For example, the Centers for Medicare &  Medicaid Services (CMS), the agency in the Department of Health and  Human Services (HHS) that is responsible for overseeing both programs,  could save billions of dollars by improving the accuracy of its payments to  Medicare Advantage programs, such as through methodology  adjustments to account for diagnostic coding differences between  Medicare Advantage and traditional Medicare. In addition, we found that  federal spending on Medicaid demonstrations could be reduced by  billions of dollars if HHS were required to improve the process for  reviewing, approving, and making transparent the basis for spending  limits approved for Medicaid demonstrations.between 2002 and 2013 has shown that HHS approved several  demonstrations without ensuring that they would be budget neutral to the  federal government.
In particular, our work  To address this issue, we suggested that Congress could require the  Secretary of Health and Human Services to improve the Medicaid  demonstration review process, through steps such as improving the  review criteria, better ensuring that valid methods are used to  demonstrate budget neutrality, and documenting and making clear the  basis for the approved limits. In September 2014, the Chairman, House  Committee on Energy and Commerce, and Ranking Member, Senate  Committee on Finance, sent a letter to CMS asking for additional  information on steps the agency was taking to improve the budget  neutrality of demonstrations. Enhancing the process HHS uses to  demonstrate budget neutrality of its demonstrations could save billions in  federal expenditures.
Reducing Contract Spending through Strategic Sourcing  In 2013, we reported that federal agencies could achieve significant cost  savings annually by expanding and improving their use of strategic  sourcing—a contracting process that moves away from numerous  individual procurement actions to a broader aggregated approach. In  particular, we reported that a reduction of 1 percent in spending from  large procurement agencies, such as DOD, would equate to over $4  billion in savings. However, a lack of clear guidance on metrics for  measuring success has hindered the management of ongoing strategic  sourcing efforts across the federal government. Since our 2013 report,  OMB has made progress by issuing guidance on calculating savings for  government-wide strategic sourcing contracts and in December 2014  issued a memorandum on category management, which in part identifies  federal spending categories suitable for strategic sourcing. These  categories cover some of the government’s largest spending categories,  including IT and professional services. As part of this effort, OMB directed  the General Services Administration to develop additional guidance and  performance metrics. However, until OMB sets government-wide goals  and establishes metrics, the government may miss opportunities for cost  savings though strategic sourcing.
In addition, strategic sourcing could play a role in helping DOD acquire  services more efficiently. In our recent high-risk work, we noted that DOD  made some progress in acquiring services through strategic sourcing, but  had more to do. For example, as of March 2014, DOD had identified  some of high-spend categories as candidates for strategic sourcing, such  as IT. Further, DOD appointed individuals within specified portfolios of  major areas of DOD services spending to help coordinate strategic  sourcing efforts. But according to DOD officials, DOD still is developing  the roles, responsibilities and authorities for some of these offices.  Additionally, the department has not yet issued guidance establishing  goals and metrics to track progress.
IRS estimated that the gross tax gap—the difference between taxes owed  and taxes paid on time—was $450 billion for tax year 2006 (the most  recent year for which data were available). IRS estimated that it  eventually would recover about $65 billion of this amount through late  payments and enforcement actions, leaving a net tax gap of $385 billion.  Because of its magnitude, even a 1 percent improvement in net tax gap  would generate almost $4 billion in revenue collections annually.
Over the last 4 years, our work identified multiple opportunities for the  government to increase revenue collections. For example, in 2014, we  identified three actions that Congress could authorize and that could  increase tax revenue collections from delinquent taxpayers by hundreds  of millions of dollars over a 5-year period: limiting issuance of passports  to applicants, levying payments to Medicaid providers, and identifying  security clearance applicants. For example, Congress could consider  requiring the Secretary of State to prevent individuals who owe federal  taxes from receiving passports. We found that in fiscal year 2008,  passports were issued to about 16 million individuals; about 1 percent of  these collectively owed more than $5.8 billion in unpaid federal taxes as  of September 30, 2008. According to a 2012 Congressional Budget Office  estimate, the federal government could save about $500 million over a 5- year period by revoking or denying passports in cases of certain federal  tax delinquencies.
Table 4 highlights these and other opportunities that could result in tens  of billions of dollars in cost savings or enhanced revenue.
section_title: Tools Exist to Help Address Issues of Fragmentation, Overlap, and Duplication
paragraphs: Addressing fragmentation, overlap, and duplication within the federal  government is challenging. Even with sustained leadership, these are  difficult issues to address because they may require agencies and  Congress to re-examine (within and across various mission areas) the  fundamental structure, operation, funding, and performance of a number  of long-standing federal programs or activities with entrenched  constituencies. As we have previously reported, these challenges are  compounded by a lack of reliable budget and performance information. If  fully and effectively implemented, the GPRA Modernization Act of 2010  (GPRAMA) and the Digital Accountability and Transparency of 2014  (DATA Act) hold promise for helping to improve performance and budget  information and helping to address challenges in identifying and  addressing areas of fragmentation, overlap, and duplication. In particular:
GPRAMA establishes a framework aimed at taking a more  crosscutting and integrated approach to focusing on results and  improving government performance. Effective implementation of  GPRAMA could help clarify desired outcomes, address program  performance spanning multiple organizations, and facilitate future  actions to reduce, eliminate, or better manage fragmentation, overlap,  and duplication.
The DATA Act requires actions that would help make spending data  comparable across programs, allowing executive branch agencies  and Congress to accurately measure the costs and magnitude of  federal investments. As we have previously reported, better data and  a greater focus on expenditures and outcomes are essential to  improving the efficiency and effectiveness of federal efforts.
We are committed to monitoring the implementation of these acts to  improve budget and performance information and help executive branch  agencies and Congress address fragmentation, overlap, and duplication.
section_title: Addressing Improper Payments Could Help Achieve Cost Savings
paragraphs: Reducing improper payments could result in significant cost savings. The  Improper Payments Information Act of 2002 (IPIA)—as amended by the  Improper Payments Elimination and Recovery Act of 2010 (IPERA) and  the Improper Payments Elimination and Recovery Improvement Act of  2012 (IPERIA)—requires executive branch agencies to (1) review all  programs and activities, (2) identify those that may be susceptible to  significant improper payments, (3) estimate the annual amount of  improper payments for those programs and activities, (4) implement  actions to reduce improper payments and set reduction targets, and (5)  report on the results of addressing the foregoing requirements.
For the first time in recent years, the government-wide improper payment  estimate increased in fiscal year 2014, primarily due to significant  increases in the improper payment estimates for Medicare, Medicaid, and  the Earned Income Tax Credit (EITC). These programs combined  account for over 76 percent of the government-wide estimate. We have  made numerous recommendations that if effectively implemented, could  help improve program management, reduce improper payments in these  programs, and achieve cost savings. While recent laws and guidance  have focused attention on the issue, agencies continue to face challenges  in reducing improper payments, such as statutory limitations and  compliance issues.
subsections: section_title: Improper Payments Remain a Government- Wide Issue
paragraphs: Agency improper payment estimates totaled $124.7 billion in fiscal year  2014, a significant increase ($19 billion) from the prior year’s estimate of  $105.8 billion. The estimated improper payments for fiscal year 2014  were attributable to 124 programs spread among 22 agencies. Table 5  shows the 12 programs with reported improper payment estimates  exceeding $1 billion for fiscal year 2014, which accounted for  approximately 93 percent of the government-wide estimate.
When excluding DOD’s Defense Finance and Accounting Service  Commercial Pay program, the reported government-wide error rate was  4.5 percent of program outlays in fiscal year 2014 compared to 4.0  percent reported in fiscal year 2013. The increase in the 2014 estimate  is attributed primarily to increased error rates in three major programs:  HHS’s Medicare Fee-for-Service, HHS’s Medicaid, and Treasury’s  Earned Income Tax Credit. As shown in figure 2, improper payment  estimates for Medicare, Medicaid, and the Earned Income Tax Credit  accounted for approximately 76 percent of the government-wide estimate  for fiscal year 2014.
section_title: Additional Efforts Are Needed to Reduce Medicare, Medicaid, and Earned Income Tax Credit Improper Payments
paragraphs: Improper payment estimates for Medicare, Medicaid, and the EITC are  among the highest estimates government-wide, and federal spending in  Medicare and Medicaid is expected to significantly increase.Consequently, it is critical that actions are taken to reduce improper  payments in these programs. Over the past several years, we made  numerous recommendations that, if effectively implemented, could  improve program management, help reduce improper payments in these  programs, and achieve cost savings.
subsections: section_title: Medicare
paragraphs: In fiscal year 2014, Medicare financed health services for approximately  54 million elderly and disabled beneficiaries at a cost of $603 billion and  reported an estimated $60 billion in improper payments. Medicare  spending generally has grown faster than the economy, and in the  coming years, continued growth in the number of Medicare beneficiaries  and in program spending will create increased challenges for the federal  government. CMS, which administers Medicare, has demonstrated strong  commitment to reducing improper payments, particularly through its  dedicated Center for Program Integrity. For example, CMS centralized the  development and implementation of automated edits—prepayment  controls used to deny Medicare claims that should not be paid—which will  help ensure greater consistency in paying only those claims that align  with national policies. Additionally, CMS awarded a contract to a Federal  Bureau of Investigation-approved contractor that will enable the agency to  conduct fingerprint-based criminal history checks of high-risk providers  and suppliers.
Nevertheless, in our February 2015 update to our high-risk series, we  reported that while CMS has demonstrated efforts to reduce improper  payments in the Medicare program, improper payment rates have  remained unacceptably high. To achieve and demonstrate reductions in  the amount of Medicare improper payments, CMS should fully exercise its  authority related to strengthening its provider and supplier enrollment  provisions and address our open recommendations related to  prepayment and postpayment claims review activities. Table 6  summarizes recommendations we made that are still open and  procedures authorized by the Patient Protection and Affordable Care Act  (PPACA) that CMS should implement to help reduce Medicare improper  payments.
Specifically, the following actions could help reduce Medicare improper  payments.
Improving use of automated edits. To help ensure that payments  are made properly, CMS uses controls called edits that are  programmed into claims processing systems to compare claims data  with Medicare requirements in order to approve or deny claims or flag  them for further review. In November 2012, we reported that use of  prepayment edits saved Medicare at least $1.76 billion in fiscal year  2010, but savings could have been greater if prepayment edits had  been more widely used. To promote greater use of effective  prepayment edits and better ensure that payments are made properly,  we recommended that CMS require Medicare administrative  contractors to (1) share information about the underlying policies and  savings related to their most effective edits; and (2) improve  automated edits that assess all quantities provided to the same  beneficiary by the same provider on the same day, so providers  cannot avoid claim denials by billing for services on multiple claim  lines or multiple claims.
Monitoring postpayment claims reviews. CMS uses four types of  contractors to conduct postpayment claims reviews to identify  improper payments. In July 2013, we found that although  postpayment claims reviews involved the same general process  regardless of which type of contractor conducted them, CMS had  different requirements for many aspects of the process across the four  contractor types. Some of these differences might impede efficiency  and effectiveness of claims reviews by increasing administrative  burden for providers. Furthermore, in July 2014, we reported that  while CMS had taken steps to prevent its contractors from conducting  certain duplicative postpayment claims reviews, CMS did not have  reliable data or provide sufficient oversight and guidance to measure  and fully prevent duplication. To improve the efficiency and  effectiveness of Medicare program integrity efforts, we recommended  that CMS reduce differences between contractor postpayment review  requirements, when possible, and monitor the database used to track  recovery audit activities to ensure that all data were submitted,  accurate, and complete.
Removing Social Security numbers from Medicare cards. The  health insurance claims number on Medicare beneficiaries’ cards  includes as one component the Social Security number of the  beneficiary (or other eligible person’s, such as a spouse). This  introduces risks that the beneficiaries’ personal information could be  obtained and used to commit identity theft. In September 2013, we  reported that CMS had not taken needed steps that would result in  selecting and implementing a technical solution for removing Social  Security numbers from Medicare cards.agency to efficiently and cost-effectively identify, design, develop, and  implement a solution to address this issue, we recommended that  CMS direct the initiation of an IT project for identifying, developing,  and implementing changes that would have to be made to CMS’s  affected systems.
Implementing actions authorized by PPACA. In addition to  provisions to expand health insurance coverage, PPACA provides  CMS with certain authorities to combat fraud, waste, and abuse in  Medicare. We reported in our February 2015 update to our high-risk  series that CMS should fully exercise its PPACA authority related to  strengthening its provider and supplier enrollment provisions. For  example, CMS should require surety bonds—a three-party agreement  in which a company, known as a surety, agrees to compensate the  bondholder if the bond purchaser failed to keep a specified promise— for certain providers and suppliers.
section_title: Medicaid
paragraphs: In fiscal year 2014, the federal share of estimated Medicaid outlays was  $304 billion, and HHS reported approximately $17.5 billion in estimated  Medicaid improper payments. The size and diversity of the Medicaid  program make it particularly vulnerable to improper payments—including  payments made for people not eligible for Medicaid or for services not  actually provided. CMS has an important role in overseeing and  supporting state efforts to reduce and recover improper payments and  has demonstrated some leadership commitment in this area. For  example, CMS issued guidance to improve corrective actions taken by  states. CMS also established the Medicaid Integrity Institute, which  provides training and technical assistance to states on approaches to  prevent improper payments and guidance on program integrity issues.
In our February 2015 high-risk update, we reported that while CMS had  taken these positive steps in recent years, in several areas, CMS had still  to address issues and recommendations that had not been fully  implemented. These issues include improving the completeness and  reliability of key data needed for ensuring effective oversight,  implementing effective program integrity processes for managed care,  ensuring clear reporting of overpayment recoveries, and refocusing  efforts on approaches that are cost-effective. Table 7 summarizes  recommendations we made that remain open and that CMS should  implement to help reduce Medicaid improper payments.
Specifically, we recommended the following actions to help reduce  Medicaid improper payments and improve program integrity.
Improving third-party liability efforts. Congress generally  established Medicaid as the health care payer of last resort, meaning  that if enrollees have another source of health care coverage—such  as private insurance—that source should pay, to the extent of its  liability, before Medicaid does. This is referred to as third-party  liability. However, there are known challenges to ensuring that  Medicaid is the payer of last resort. For example, states have reported  challenges working with private insurers, including willingness to  release coverage information to states and denying claims for  procedural reasons. While CMS has issued guidance to states, we  recommended additional actions that could help to improve cost- saving efforts in this area, such as monitoring and sharing information  on third-party liability efforts and challenges across all states and  providing guidance to states on oversight of third-party liability efforts  related to Medicaid managed care plans.
Increasing oversight of managed care. Medicaid finances the  delivery of health care services to beneficiaries through fee-for-service  payments to participating providers and capitated payments to  managed care organizations. Most Medicaid beneficiaries are in  managed care, and managed care expenditures have been growing  at a faster rate than fee-for-service expenditures. In May 2014, we  reported that most state and federal program integrity officials we  interviewed told us that they did not closely examine managed care  payments, focusing on fee-for-service claims instead. To help  improve the efficiency and effectiveness of program integrity efforts,  we recommended that CMS require states to conduct audits of  payments to and by managed care organizations, update managed  care guidance on program integrity practices, and provide states with  additional support in overseeing managed care program integrity.
Strengthening program integrity. CMS has taken positive steps to  oversee program integrity efforts in Medicaid, including implementing  certain recommendations we made.address issues and recommendations that have not been fully   CMS needs to take action to  implemented, such as improving reporting of key data, strengthening  its efforts to calculate return on investment for its program integrity  efforts, and using knowledge gained from its comprehensive reviews  of states to better focus audit resources and improve recovery of  improper payments.
section_title: Earned Income Tax Credit
paragraphs: In fiscal year 2014, IRS reported program payments of $65.2 billion for  the EITC. According to IRS, an estimated 27.2 percent, or $17.7 billion,  of these program payments were improper. The estimated improper  payment rate for EITC has remained relatively unchanged since fiscal  year 2003 (the first year IRS had to report estimates of these payments to  Congress), but the amount of improper EITC payments increased from an  estimated $10.5 billion in fiscal year 2003 to nearly $18 billion in fiscal  year 2014.
GAO-15-290. child requirements, taxpayers’ filing status, and EITC claims associated  with complex or nontraditional living situations. Verification errors relate to  IRS’s inability to identify individuals improperly reporting income to  erroneously claim EITC amounts to which they are not entitled.  Verification errors include underreporting and overreporting of income by  wage earners as well as taxpayers who report that they are self- employed. Although the EITC program has been modified a number of  times since its enactment in 1975 to reduce complexity and help improve  the program’s administration, complexity has remained a key factor  contributing to improper payments in the program.
IRS has undertaken a number of compliance and enforcement activities  to reduce EITC improper payments, and in fiscal year 2014 it protected  an estimated $3.5 billion in federal revenue. Among other things, IRS  uses audits to help identify EITC improper payments, and in June 2014,  we reported that about 45 percent of correspondence audits (audits done  by mail) that closed in fiscal year 2013 focused on EITC issues. IRS has  reported that tax returns with EITC claims were twice as likely to be  audited as other tax returns. However, we found that the effectiveness of  these audits may be limited because of regular backlogs in responding to  taxpayers since 2011 and unclear correspondence that generated  additional work for IRS, such as telephone calls to IRS examiners. These  issues have imposed unnecessary burdens on taxpayers and costs for  IRS. IRS acknowledged these concerns and the limitations faced in  significantly reducing EITC improper payments using the traditional audit  process. Consequently, IRS initiated several programs to address EITC  improper payments, such as increasing outreach and education to  taxpayers and return preparers.
Legislative action and significant changes in IRS compliance processes  likely would be necessary to make any meaningful reduction in improper  payments. Recently, we recommended matters for congressional  consideration or executive actions that if effectively implemented, could  help to reduce EITC improper payments.
Regulating paid tax preparers. In August 2014, IRS reported that 68  percent of all tax returns claiming the EITC in tax years 2006 and  2007 were prepared by paid tax preparers—most of whom were not  subject to any IRS regulation—and that from 43–50 percent of the  returns overclaimed the credit. Similarly, in our undercover visits to  randomly selected tax preparers, a sample that cannot be  generalized, we found errors in EITC claims, resulting in significant  overstatement of refunds. Establishing requirements for paid tax  return preparers could improve the accuracy of the tax returns they  prepare. Based in part on our recommendation, in 2010 IRS initiated  steps to regulate certain preparers through testing and education  requirements. However, the courts ruled that IRS lacked such  regulatory authority. Although IRS began a voluntary program to  recognize preparers who complete continuing education and testing  requirements, mandating these requirements could have a greater  impact on tax compliance. In 2014, we suggested that Congress  consider granting IRS the authority to regulate paid tax preparers, if it  agrees that significant paid preparer errors exist.
Accelerating W-2 filing deadlines. IRS estimates that it paid $5.8  billion in fraudulent identity theft refunds during the 2013 filing  season. While we do not know the extent to which invalid EITC  payments are the result of identity theft, IRS has reported that  improper payments are a mix of unintentional mistakes and fraud. A  common EITC error is misreporting income. IRS issues most refunds  months before receiving and matching information returns, such as  the W-2 “Wage and Tax Statement,” to tax returns. Treasury recently  proposed to Congress that the W-2 deadlines be moved to January  31 to facilitate the use of earnings information in the detection of  noncompliance. In August 2014, we recommended that IRS  estimate the cost and benefits of options to implement pre-refund  matching using W-2 data. Because any change could impose  burdens on employers and taxpayers as well as create additional  costs to IRS for systems and process changes, Congress and other  stakeholders would need information on this impact to fully assess  any potential changes.
Broadening math error authority. IRS has statutory authority— called math error authority—to correct certain errors, such as  calculation mistakes or omitted or inconsistent entries, during tax  return processing of EITC claims. According to the Treasury Inspector  General for Tax Administration, IRS has math error authority to  address some erroneous claims, but additional authority to  systematically disallow certain erroneous EITC claims with  unsupported wages could reduce improper payments.proposed expanding IRS authority to permit it to correct errors in  cases where information provided by the taxpayer does not match  information in government databases among other things. Expanding  such authority—which at various times we have suggested Congress  consider—could help IRS correct additional errors and avoid  burdensome audits and taxpayer penalties.
section_title: Recent Efforts Focused Attention on Improper Payments, but Challenges Remain in Estimating and Reducing Them
paragraphs: IPERIA is the latest in a series of laws aimed at reducing improper  payments. IPERIA directs OMB to annually identify a list of high-priority  programs for greater levels of oversight and review, including establishing  annual targets and semi-annual or quarterly actions for reducing improper  payments. IPERIA also enacted into law a Do Not Pay initiative, elements  of which already were being developed under executive branch authority.  The Do Not Pay initiative is a web-based, centralized data-matching  service that allows agencies to review multiple databases to determine a  recipient’s award or payment eligibility prior to making payments.
Similarly, the DATA Act calls on Treasury to establish a data analysis  center, or to expand an existing service, to provide data, analytic tools,  and data-management techniques for preventing or reducing improper  payments. Effective implementation of the DATA Act and the use of  data analytic tools could help agencies to detect, reduce, and prevent  improper payments.
In addition to these legislative initiatives, OMB has continued to play a  key role in the oversight of government-wide improper payments. OMB  established guidance for federal agencies on reporting, reducing, and  recovering improper payments as required by IPIA, as amended, and on  protecting privacy while reducing improper payments with the Do Not Pay  initiative. estimating improper payments directs agencies to report on the causes of  improper payments using more detailed categories than previously  required, such as program design issues or administrative errors at the  federal, state, or local agency level. As we previously reported, detailed  analysis of the root causes of improper payments can help agencies to  identify and implement targeted corrective actions.
Office of Management and Budget, Appendix C to Circular No. A-123, Requirements for  Effective Estimation and Remediation of Improper Payments, OMB Memorandum M-15- 02 (Washington, D.C.: Oct. 20, 2014); Revised, Financial Reporting Requirements, OMB  Circular No. A-136 (revised 2014); and Protecting Privacy while Reducing Improper  Payments with the Do Not Pay Initiative, OMB Memorandum M-13-20 (Washington, D.C.:  Aug. 16, 2013). estimates for all of the programs and activities they identified as  susceptible to significant improper payments. Specifically, two federal  agencies did not report estimated improper payment amounts for four  risk-susceptible programs. For example, HHS did not report an improper  payment estimate in fiscal year 2014 for its Temporary Assistance for  Needy Families (TANF) program, which had program outlays of about  $16.3 billion.
Furthermore, IPERA established a requirement for agency IGs to report  annually on agencies’ compliance with the criteria contained in IPERA.  Under OMB implementing guidance, these reports should be completed  within 180 days of the publication of the federal agencies’ annual  performance and accountability reports (PAR) or agency financial reports  (AFR). According to IPERA, if a program is found to be noncompliant in a fiscal year, the agency must submit a plan to Congress describing  the actions that the agency will take to bring the program into  compliance;  for 2 consecutive fiscal years, and if OMB determines that additional  funding would help the agency improve, the agency and OMB may  take steps to transfer or request additional funding for intensified  compliance efforts; and  for 3 consecutive years, the agency must submit to Congress a  reauthorization proposal for each noncompliant program or activity or  any proposed statutory changes the agency deems necessary to  bring the program or activity into compliance.
In December 2014, we reported on agency compliance with the criteria  contained in IPERA for fiscal year 2013, as reported by IGs.
We found  that the most common instances of noncompliance as reported by the IGs  related to two criteria: (1) publishing and meeting improper payment  reduction targets and (2) reporting improper payment estimates below 10  percent. For fiscal years 2012 through 2014, we also analyzed IG  reports and agency PARs or AFRs and identified five programs with  improper payment estimates greater than $1 billion that have been  noncompliant with at least one of these criteria for 3 consecutive years,   These five programs accounted for approximately  as show in table 8.$75.9 billion, or 61 percent of the fiscal year 2014 government-wide  improper payment estimate.
In addition to the legislative criteria, various IGs reported deficiencies in  their most recent annual compliance reports, including risk assessments  that may not accurately assess the risk of improper payments and  estimation methodologies that may not produce reliable estimates.  Similarly, we recently reported on weaknesses in improper payment risk  assessments at the Department of Energy and in the estimating  methodology for DOD’s TRICARE program.
In addition to the challenges that we and the IGs reported, some agencies  reported in their fiscal year 2014 AFRs that program design issues could  hinder efforts to estimate or recapture improper payments.
Coordination with states. HHS cited statutory limitations for its state- administered TANF program, which prohibited it from requiring states  to participate in developing an improper payment estimate for the  program. Despite these limitations, HHS reported that it had taken  actions to assist states in reducing improper payments, such as  working with states to analyze noncompliance findings from audits  related to TANF and requiring more accurate information about the  ways states used TANF block grants.
Recovery auditing. USDA reported that section 281 of the  Department of Agriculture Reorganization Act of 1994 precluded the  use of recovery auditing techniques. Specifically, the agency reported  that section 281 provides that 90 days after the decision of a state, a  county, or an area committee is final, no action may be taken to  recover the amounts found to have been erroneously disbursed as a  result of the decision, unless the participant had reason to believe that  the decision was erroneous. This statute is commonly referred to as  the Finality Rule, and according to USDA, it affects the Farm Service  Agency’s ability to recover overpayments.
With outlays for major programs, such as Medicare and Medicaid,  expected to increase over the next few years, it is critical that actions are  taken to reduce improper payments. In addition to agencies’ efforts,  legislation, OMB guidance, and auditor oversight of agency spending and  related internal controls have been important factors in addressing  improper payments. There is considerable opportunity here to achieve  cost savings without reducing or detrimentally affecting the valuable  programs that serve our citizens. For this reason, we will continue to  focus attention on improper payments to assist Congress in ensuring that  taxpayer dollars are adequately safeguarded and used for their intended  purposes.
Chairman Enzi, Ranking Member Sanders, and Members of the  Committee, this concludes my prepared statement. I would be pleased to  answer questions.
section_title: GAO Contacts
paragraphs: For further information on issues of fragmentation, overlap, duplication or  cost savings, please contact Orice Williams Brown, Managing Director,  Financial Markets and Community Investment, who may be reached at  (202) 512-8678 or williamso@gao.gov; or A. Nicole Clowers, Director,  Financial Markets and Community Investment, who may be reached at  (202) 512-8678 or clowersa@gao.gov. For information on improper  payment issues, please contact Beryl H. Davis, Director, Financial  Management and Assurance at (202) 512-2623 or davisbh@gao.gov.  Contact points for our Congressional Relations and Public Affairs offices  may be found on the last page of this statement.
section_title: Related GAO Products
paragraphs: Improper Payments: TRICARE Measurement and Reduction Efforts  Could Benefit from Adopting Medical Record Reviews. GAO-15-269.  Washington, D.C.: February 18, 2015.
High-Risk Series: An Update. GAO-15-290. Washington, D.C.: February  11, 2015.
Medicaid: Additional Federal Action Needed to Further Improve Third- Party Liability Efforts. GAO-15-208. Washington, D.C.: January 28, 2015.
Identity and Tax Fraud: Enhanced Authentication Could Combat Refund  Fraud, but IRS Lacks an Estimate of Costs, Benefits and Risks.  GAO-15-119. Washington, D.C.: January 20, 2015.
Improper Payments: DOE’s Risk Assessments Should Be Strengthened.  GAO-15-36. Washington, D.C.: December 23, 2014.
Improper Payments: Inspector General Reporting of Agency Compliance  under the Improper Payments Elimination and Recovery Act.  GAO-15-87R. Washington, D.C.: December 9, 2014.
Federal Data Transparency: Effective Implementation of the DATA Act  Would Help Address Government-wide Management Challenges and  Improve Oversight. GAO-15-241T. Washington, D.C.: December 3, 2014.
Identity Theft: Additional Actions Could Help IRS Combat the Large,  Evolving Threat of Refund Fraud. GAO-14-633. Washington, D.C.:  August 20, 2014.
Medicare Program Integrity: Increased Oversight and Guidance Could  Improve Effectiveness and Efficiency of Postpayment Claims Reviews.  GAO-14-474. Washington, D.C.: July 18, 2014.
Improper Payments: Government-Wide Estimates and Reduction  Strategies. GAO-14-737T. Washington, D.C.: July 9, 2014.
IRS Correspondence Audits: Better Management Could Improve Tax  Compliance and Reduce Taxpayer Burden. GAO-14-479. Washington,  D.C.: June 5, 2014.
Medicaid Program Integrity: Increased Oversight Needed to Ensure  Integrity of Growing Managed Care Expenditures. GAO-14-341.  Washington, D.C.: May 19, 2014.  2014 Annual Report: Additional Opportunities to Reduce Fragmentation,  Overlap, and Duplication and Achieve Other Financial Benefits.  GAO-14-343SP. Washington, D.C.: April 8, 2014.
Paid Tax Return Preparers: In a Limited Study, Preparers Made  Significant Errors. GAO-14-467T. Washington, D.C.: April 8, 2014.
Medicare Information Technology: Centers for Medicare and Medicaid  Services Needs to Pursue a Solution for Removing Social Security  Numbers from Cards. GAO-13-761. Washington, D.C.: September 10,  2013.
Medicare Program Integrity: Increasing Consistency of Contractor  Requirements May Improve Administrative Efficiency. GAO-13-522.  Washington, D.C.: July 23, 2013.  2013 Annual Report: Actions Needed to Reduce Fragmentation, Overlap,  and Duplication and Achieve Other Financial Benefits. GAO-13-279SP.  Washington, D.C.: April 9, 2013.
Medicaid Integrity Program: CMS Should Take Steps to Eliminate  Duplication and Improve Efficiency. GAO-13-50. Washington, D.C.:  November 13, 2012.
Medicare Program Integrity: Greater Prepayment Control Efforts Could  Increase Savings and Better Ensure Proper Payment. GAO-13-102.  Washington, D.C.: November 13, 2012.  2012 Annual Report: Opportunities to Reduce Duplication, Overlap and  Fragmentation, Achieve Savings, and Enhance Revenue.  GAO-12-342SP. Washington D.C.: February 28, 2012.
Opportunities to Reduce Potential Duplication in Government Programs,  Save Tax Dollars, and Enhance Revenue. GAO-11-318SP. Washington,  D.C.: March 1, 2011.
Paid Tax Return Preparers: In a Limited Study, Chain Preparers Made  Significant Errors. GAO-06-563T. Washington, D.C.: April 4, 2006.
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