[House Hearing, 114 Congress]
[From the U.S. Government Publishing Office]






        EXAMINING BILLION DOLLAR WASTE THROUGH IMPROPER PAYMENTS

=======================================================================

                                HEARING

                               BEFORE THE

                            SUBCOMMITTEE ON
                         GOVERNMENT OPERATIONS

                                 OF THE

                         COMMITTEE ON OVERSIGHT
                         AND GOVERNMENT REFORM
                        HOUSE OF REPRESENTATIVES

                    ONE HUNDRED FOURTEENTH CONGRESS

                             SECOND SESSION

                               __________

                           SEPTEMBER 22, 2016

                               __________

                           Serial No. 114-166

                               __________

Printed for the use of the Committee on Oversight and Government Reform



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         Available via the World Wide Web: http://www.fdsys.gov
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              COMMITTEE ON OVERSIGHT AND GOVERNMENT REFORM

                     JASON CHAFFETZ, Utah, Chairman
JOHN L. MICA, Florida                ELIJAH E. CUMMINGS, Maryland, 
MICHAEL R. TURNER, Ohio                  Ranking Minority Member
JOHN J. DUNCAN, Jr., Tennessee       CAROLYN B. MALONEY, New York
JIM JORDAN, Ohio                     ELEANOR HOLMES NORTON, District of 
TIM WALBERG, Michigan                    Columbia
JUSTIN AMASH, Michigan               WM. LACY CLAY, Missouri
PAUL A. GOSAR, Arizona               STEPHEN F. LYNCH, Massachusetts
SCOTT DesJARLAIS, Tennessee          JIM COOPER, Tennessee
TREY GOWDY, South Carolina           GERALD E. CONNOLLY, Virginia
BLAKE FARENTHOLD, Texas              MATT CARTWRIGHT, Pennsylvania
CYNTHIA M. LUMMIS, Wyoming           TAMMY DUCKWORTH, Illinois
THOMAS MASSIE, Kentucky              ROBIN L. KELLY, Illinois
MARK MEADOWS, North Carolina         BRENDA L. LAWRENCE, Michigan
RON DeSANTIS, Florida                TED LIEU, California
MICK MULVANEY, South Carolina        BONNIE WATSON COLEMAN, New Jersey
KEN BUCK, Colorado                   STACEY E. PLASKETT, Virgin Islands
MARK WALKER, North Carolina          MARK DeSAULNIER, California
ROD BLUM, Iowa                       BRENDAN F. BOYLE, Pennsylvania
JODY B. HICE, Georgia                PETER WELCH, Vermont
STEVE RUSSELL, Oklahoma              MICHELLE LUJAN GRISHAM, New Mexico
EARL L. ``BUDDY'' CARTER, Georgia
GLENN GROTHMAN, Wisconsin
WILL HURD, Texas
GARY J. PALMER, Alabama

                   Jennifer Hemingway, Staff Director
                    Andrew Dockham, General Counsel
                      Katy Rother, Senior Counsel
                    Sharon Casey, Deputy Chief Clerk
                 David Rapallo, Minority Staff Director
                                 ------                                

                 Subcommittee on Government Operations

                 MARK MEADOWS, North Carolina, Chairman
JIM JORDAN, Ohio                     GERALD E. CONNOLLY, Virginia, 
TIM WALBERG, Michigan, Vice Chair        Ranking Minority Member
TREY GOWDY, South Carolina           CAROLYN B. MALONEY, New York
THOMAS MASSIE, Kentucky              ELEANOR HOLMES NORTON, District of 
MICK MULVANEY, South Carolina            Columbia
KEN BUCK, Colorado                   WM. LACY CLAY, Missouri
EARL L. ``BUDDY'' CARTER, Georgia    STACEY E. PLASKETT, Virgin Islands
GLENN GROTHMAN, Wisconsin            STEPHEN F. LYNCH, Massachusetts



















                            C O N T E N T S

                              ----------                              
                                                                   Page
Hearing held on September 22, 2016...............................     1

                               WITNESSES

Mr. David Mader, Controller, Office of Federal Financial 
  Management, Office of Management and Budget
    Oral Statement...............................................     3
    Written Statement............................................     6
Ms. Sheila Conley, Deputy Chief Financial Officer, U.S. 
  Department of Health and Human Services
    Oral Statement...............................................    17
    Written Statement............................................    19
Ms. Laurie Park, Deputy Assistant Secretary of Finance, U.S. 
  Department of Veterans Affairs
    Oral Statement...............................................    29
    Written Statement............................................    31
Ms. Marianna Lacanfora, Assistant Deputy Commissioner for Policy 
  and Chair of the Improper Payments Board, U.S. Social Security 
  Administration
    Oral Statement...............................................    35
    Written Statement............................................    37
Mr. Jeff Schramek, Assistant Commissioner, Bureau of Debt 
  Management Services, U.S. Department of the Treasury
    Oral Statement...............................................    49
    Written Statement............................................    51


 
        EXAMINING BILLION DOLLAR WASTE THROUGH IMPROPER PAYMENTS

                              ----------                              


                      Thursday, September 22, 2016

                  House of Representatives,
             Subcommittee on Government Operations,
              Committee on Oversight and Government Reform,
                                                   Washington, D.C.
    The subcommittee met, pursuant to call, at 3:05 p.m., in 
Room 2247, Rayburn House Office Building, Hon. Mark Meadows 
[chairman of the subcommittee] presiding.
    Present: Representatives Meadows, Connolly, Maloney, and 
Clay.
    Also Present: Representative Palmer.
    Mr. Meadows. The chair would ask unanimous consent that we 
can suspend the rules, the House rules, and go ahead and start 
this subcommittee hearing.
    And hearing no objection from my learned colleague and 
friend, since there is no objection, the committee is 
considered in order and starting. So we'll go ahead.
    The subcommittee will come to order. Without objection, the 
chair is authorized to declare a recess at any time. And as we 
have noted, I want to thank each of you for being here today.
    Certainly, as we come to this time of the year where we 
look at improper payments and where we are and what has taken 
place, what should have taken place, what may have taken place, 
I look for each one of you to, hopefully, help us eliminate 
what changes that we can make in terms of, not only our 
accounting process, but our expenditures. And part of it is 
just reporting.
    And when we look at that, the American people expect us to 
truly be the stewards of their hard-earned taxpayer money. And 
the interesting thing that I found is, in light of so many 
improper payments and where we are, it is troubling many times 
because of the number and how high it is. And eventually, as I 
said, it adds up to real money.
    And so when we look at the numbers, it can be troubling. I 
would also say, however, though, what I have found is going 
from agency to agency to agency is a real dedication on behalf 
of the Federal worker to be accountable, and that has been one 
of the interesting aspects.
    So sometimes it is a number of our Federal employees who 
have to deal with a bureaucracy that they did not create. And 
by saying that, it is imperative that this committee look at 
the bureaucracy that has been created and, hopefully, start to 
address that and how we can, not only have better reporting, 
but also have an issue where we start to really focus in on 
making sure that we are accountable to the American taxpayer.
    So in that, I just--I've got a longer written opening 
statement that we'll submit for the records, but because my 
good friend, Mr. Connolly, has now arrived, I will--if he is 
ready, I will recognize him for his opening statement.
    Mr. Connolly. Thank you, Mr. Chairman.
    My opening statement is going to be eerily similar to that 
of Mr. Clay. So we'll enter something for the record and forgo 
a verbal statement. He and I are like twins. We think alike, we 
act alike, we speak alike, and I can't add to the wisdom of my 
friend from St. Louis.
    Mr. Meadows. Well, I will go ahead and acknowledge the 
presence of the twins here to my right and also go ahead and 
introduce our witnesses.
    I will hold the record open for 5----
    Mr. Connolly. I have been informed my friend did not read 
our brilliant statement. Lord Almighty here. Here's what he 
would have said, Mr. Chairman.
    No, I will enter it into the record and not take up the 
time of the committee. Thank you.
    Mr. Meadows. I'll hold the record open for 5 legislative 
days for any members who would like to submit a written 
statement.
    We will now recognize our panel of witnesses. I'm pleased 
to welcome the Honorable David Mader, controller at the Office 
of Federal Financial Management and Office of Management and 
Budget, OMB. Welcome.
    Ms. Sheila Conley--is that correct, Conley?
    Ms. Conley. Yes, sir.
    Mr. Connolly. Spelled wrong, Mr. Chairman.
    Mr. Meadows. I wanted to verify.
    -- deputy chief financial officer at the U.S. Department of 
Health and Human Services. Welcome.
    Ms. Laurie Park, deputy assistant secretary of finance at 
the U.S. Department of Veterans Affairs. Welcome.
    Ms. Marianna LaCanfora--that's close, right?
    Ms. LaCanfora. Right.
    Mr. Meadows. All right.
    -- assistant deputy commissioner of policy and chair of the 
Improper Payments Board at the U.S. Social Security 
Administration. Welcome.
    And Mr. Jeff Schramek, assistant commissioner of the Bureau 
of Debt Management Services at the U.S. Department of Treasury. 
Welcome to you as well.
    And pursuant to committee rules, all witnesses will be 
sworn in before they testify. And so if you would please rise 
and raise your right hand.
    All right. Do you solemnly swear or affirm that the 
testimony you're about to give will be the truth, the whole 
truth, and nothing but the truth?
    Thank you.
    Let the record reflect that the witnesses answered in the 
affirmative.
    And in order to allow time for discussion, please limit 
your oral testimony, if you would, to 5 minutes, but your 
entire written statement will be made part of the record.
    So I'll go ahead, Mr. Mader, we'll recognize you for 5 
minutes.

                       WITNESS STATEMENTS

                    TESTIMONY OF DAVID MADER

    Mr. Mader. Thank you, Chairman Meadows, Ranking Member 
Connolly, and distinguished members of the subcommittee for 
inviting me here today to discuss the administration's efforts 
to reduce improper payments.
    Addressing improper payments has been a central component 
of this administration's overall effort to eliminate fraud, 
waste, and abuse. When the President took office in 2009, the 
improper payment error rate was 5.2 percent, an all-time high. 
Since then, the administration, working together with this 
Congress and the IGs, has made progress strengthening 
accountability and transparency through annual reviews by 
agency IGs and has expanded the review requirements for high-
priority programs.
    As a result of this concerted effort in fiscal year 2015, 
the past year, the rate was 4.39 percent. It's important to 
note that agencies recovered almost $20 billion in overpayments 
through payment recapture audits and other methods in fiscal 
year 2015. However, this recovery amount is not factored into 
the calculation of the 2015 improper payment rate or amount.
    Two notable success stories of major government programs 
that experienced significant decreases in improper payments is 
the Unemployment Insurance Program and HHS' Medicare fee-for-
service. Under the improper--under the unemployment program, 
decreased improper payment rates amounted to $2 billion, or 1 
percent, between fiscal year 2014 and 2015. This program was 
able to achieve this reduction by using an enhanced national 
directory of new hires crossmatch and providing enhanced 
monitoring and assistance to the States.
    The HHS Medicare fee-for-service improper payment rate also 
decreased by $2 billion between 2014 and 2015 by reducing 
improper payments for inpatient hospital, durable medical 
equipment, prosthetics, orthotics, supplies and claims through 
the use of prior authorizations, new regulations, and changes 
in agency's provider education. And I mention these two 
programs in particular because, as you know, these are 
programs--and there are many programs--that while funded by the 
Federal Government, are actually administered by States, and 
that adds to complexity in ensuring that proper payments are 
made.
    Prior to fiscal year 2015, agencies were required to 
categorize their improper payment estimates into three 
categories. However, several years ago, these categories were 
recognized as providing limited value in determining the root 
cause of improper payments.
    As a result, OMB developed improper payment categories that 
expanded the existing categories and created 13 predefined 
categories for agencies to use. Page 3 of my written statement 
actually has a nice graphic that shows the before and after. 
And these allow agencies now to do a better job of analyzing 
the root cause in particular programs.
    Corrective actions to address root causes are an area we 
want agencies to do more of. Beginning in fiscal year 2015, 
with the issuance of OMB Circular A-136, OMB began to address a 
disconnect between agencies' corrective action plans and the 
root cause analysis. OMB has held townhall meetings with both 
agency representatives and IGs over the past 2 years.
    Also in 2015, MITRE, a federally funded research and 
development center, conducted an independent research project 
that focused on governmentwide payment integrity and improper 
payments. And as a result of that study, my office is looking 
at exploring and determining whether there's a viable need to 
create another program integrity group at the executive level. 
Although, I do note in some of the--my fellow witnesses here, 
actually, from the agencies have started their own group over 
the last several months, which allows them to share best 
practices and other ideas on how to improve improper payments.
    In May of 2016, we also facilitated a meeting between 
senior officials from GAO, HHS, and CMS to discuss corrective 
action plans and specific challenges in their particular high 
error programs. GAO--and Gene Dodaro was there for this entire 
meeting--was able to offer some insights around additional 
areas where HHS may want to explore corrective actions.
    The administration appreciates the opportunity to work with 
the Congress to achieve the passage and enactment of S.614, the 
Federal Improper Payment Coordination Act. And I'm pleased to 
report that OMB is working now with agencies to implement those 
requirements. And my colleague from Treasury has responsibility 
for implementing a lot of that as part of the do-not-pay 
initiative, and I'm sure he'll touch on that in his testimony.
    We also worked with Congress on S.2133, the Fraud Reduction 
and Data Analytics Act of 2015, which was recently signed into 
law. And, again, when we reissued our Circular A-123 in the 
summer, we actually started including now some of the 
requirements for that. So in both of these cases, we've moved 
aggressively to implement these new requirements in the 
legislation.
    In December 4 of 2015, we submitted to Congress the first 
report required by OMB for the do-not-pay initiative. The 
report outlined the multiple components of our phased strategy 
for screening payments. And Mr. Schramek is going to talk 
extensively about the successes that they've had since the 
initiation of this program.
    I think it's important to note that, in addition to 
Treasury, there are agency payment integrity centers at CMS, at 
DOD, at SSA, and the Department of Labor. So it's not just 
unique to the do-not-pay initiative at Treasury. We have 
multiple efforts going on across the executive branch.
    There's a compelling evidence that investments in 
administrative resources can significantly decrease the rate of 
improper payments and recoup many times their initial 
investment. That's why this administration for multiple years 
has proposed making significant investments in program 
integrity initiatives, both in the 2016 as well as the 2017 
budget. And many of these initiatives do not involve additional 
expenditure of funds. They actually require legislative 
changes. And I believe that this is an area where this 
committee can help with other committees in Congress in 
educating them on the wisdom of making some of these 
legislative changes.
    Combating improper payments continues to be a top priority 
for this administration, and we continue to explore new and 
innovative ways to address these problems. Although progress 
has been made, much more remains to be done, and we need your 
help.
    We look forward to working with the Congress to pass many 
of the provisions contained in the President's 2017 budget. 
Thank you for inviting me today, and I look forward to your 
questions.
    [Prepared statement of Mr. Mader follows:]
    
    
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    Mr. Meadows. Thank you so much.
    Ms. Conley, you're recognized for 5 minutes.

                   TESTIMONY OF SHEILA CONLEY

    Ms. Conley. Good afternoon, Chairman Meadows, Ranking 
Member Connolly, and distinguished members of the subcommittee. 
Thank you for your leadership in improving Federal financial 
management, and thank you for inviting me to testify about the 
Department of Health and Human Services' efforts to reduce 
improper payments.
    I appreciate the opportunity to describe HHS' commitment 
and progress in addressing improper payments as well as some of 
our major initiatives. With outlays of approximately $1 
trillion and responsibility for some of the government's 
largest programs, strengthening program integrity and reducing 
improper payments is a top priority of the Department. This 
focus extends to every member of HHS' senior leadership team 
and throughout all of our operating divisions and programs. 
While we've made significant progress, more work remains.
    Improper payments result from many circumstances, including 
a lack of or insufficient documentation to support a sampled 
claim. Improper payments are not measures of fraud, although 
the concepts are often mistakenly used interchangeably.
    HHS is focused on improper payments since 1996 when we 
worked with the HHS Office of the Inspector General to 
establish a Medicare fee-for-service error rate. Since then, 
we've established error rate processes for several additional 
programs and continue to implement targeted corrective actions.
    For fiscal year 2015, HHS reported error rates for seven 
programs that are susceptible to significant improper payments. 
Two programs, Medicare fee-for-service and foster care, 
reported lower rates since last year. However, five programs 
reported higher rates compared to the previous year. Through 
these seven programs, about 95 percent of the Department's 
outlays are subjected to the rigors of an annual error rate 
measurement process and the scrutiny of public disclosure.
    In fiscal year 2015, we also reported rates for seven 
Superstorm Sandy programs as directed by law. We've learned 
that our efforts to reduce improper payments must be strategic, 
multifaceted, and continuous. To that end, we're pursuing three 
approaches that deliver results: Leveraging technology, 
strengthening key partnerships, and exploring innovative 
solutions.
    As for leveraging technology, one of our major initiatives 
is the fraud prevention system, which uses predictive analytics 
technology to automatically screen Medicare fee-for-service 
claims prior to payment. That's an average of 4-1/2 million 
claims per day that are screened. It also flags suspicious 
patterns and identifies investigative leads. For 2015, we 
reported a return on investment of $11.50 for every dollar the 
government spends on this system.
    As for strengthening key partnerships, it's important to 
recognize that many of our programs are State administered, 
which make the States critical to our success. We're working 
closely with State and Medicaid and CHIP officials to implement 
important requirements that will both strengthen program 
integrity and directly impact the error rates.
    A very promising innovative solution relates to HHS' use of 
prior authorization initiatives in Medicare fee-for-service, an 
approach used in the private sector and other healthcare 
programs. HHS began using prior authorization for power 
mobility devices and is expanding this practice to other areas.
    While our priority is to make payments properly in the 
first place, we also focus on recovering improper payments when 
they do occur. For example, the Medicare fee-for-service 
recovery audit program has collected over $10 billion since 
2009.
    While the Department has made progress, more work remains. 
We have a proven track record of working hard to address 
improper payments, and this area is and will continue to be a 
top priority for the Department. We look forward to working 
with this subcommittee and our partners and other Federal 
agencies as well as the States to reduce improper payments and 
strengthen our programs.
    Thank you again for this opportunity to testify. I'm happy 
to answer any questions that you may have.
    [Prepared statement of Ms. Conley follows:]
    
    
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    Mr. Meadows. Thank you, Ms. Conley.
    Ms. Park, you're recognized for 5 minutes.

                    TESTIMONY OF LAURIE PARK

    Ms. Park. Good afternoon, Chairman Meadows, Ranking Member 
Connolly, and members of the subcommittee. Thank you for 
inviting me here today to discuss VA's accomplishments and 
plans for reducing improper payments and achieving sustained 
compliance to IPERA.
    As the VA deputy assistant secretary for finance, I am 
responsible to the interim chief financial officer for the 
departmentwide financial management activities. I am keenly 
aware that VA's financial management needs to improve, and I 
assure you that the Department is taking aggressive action to 
address our financial management challenges, including 
compliance with IPERA, as part of our stewardship of taxpayers' 
dollars.
    The Department is currently responsible for ensuring 
accurate testing, projections, and annual reporting of improper 
payments in 14 programs. These 14 programs provide a wide range 
of goods and services, including care in the community for our 
Nation's veterans, medical supplies to VAhospital and clinics, 
benefits including compensation for disabilities, education, 
and vocational rehabilitation for our veterans, rebuilding 
after Hurricane Sandy, and payments to Federal employees.
    I am responsible for issuing departmentwide guidance for 
implementing IPERA and for providing oversight on related 
departmental activities. In an effort to ensure commitment and 
accountability, a senior accountable official is responsible 
for identifying and reducing improper payments in their 
programs.
    In May 2016, the VA Office of Inspector General reported 
that VA did not comply with two of six IPERA requirements 
because it did not meet reduction targets and maintain a gross 
improper payment rate of less than 10 percent for all programs. 
Eight of these programs did not meet reduction targets 
established in fiscal year 2014, and two of these programs also 
exceeded the 10 percent threshold. OIG also reported that VA's 
increase was due primarily to improvements in estimating 
improper payments.
    In 2015, the Department improved its testing in response to 
an OIG finding that acquisition regulation requirements were 
not appropriately considered. VA collaborated closely with the 
Office of Management and Budget and the IG to ensure the 
accurate understanding of the effect of this concern. As a 
result, VA classified payments that did not comply with 
applicable Federal procurement laws, including the Federal 
Acquisition Regulation, as improper.
    Prior to 2016, VA's longstanding practice had been to rely 
on authorization with individual providers to procure care in 
the community when other arrangements were not practical or 
would delay care that our veterans urgently need. Some smaller 
providers and those who only treat a few veterans a year may 
consider following all five requirements a disincentive to 
treating veterans.
    In an effort to find a way to comply with statute and 
regulation, the VA has sought legislative authority to enter 
into provider agreements. This legislation would greatly reduce 
improper payments that were considered technically improper, 
but do not represent any form of fraud, waste, or abuse.
    In 2015, the VA increased senior leadership collaboration 
and awareness of improper payment challenges. We also 
repurposed existing resources to establish a new office focused 
on driving identification and reduction of improper payments. 
This office's singular focus on achieving IPERA compliance has 
elevated the priority and awareness of this important objective 
across the Department.
    Furthermore, the VA is working with the Department of 
Treasury through Do Not Pay and the Social Security 
Administration using death-to-match capabilities to identify 
improper payments in both the pre- and the postpayment phases.
    We still have additional opportunities to leverage these 
resources, and VA supports Treasury's legislative proposal to 
enhance the effectiveness of Do Not Pay. We are continuing our 
collaboration with Treasury on debt collection and utilizing 
other Treasury offerings that improve our financial management 
performance.
    In addition, we have initiated a planning for a new 
financial management system, which will strengthen our internal 
controls, provide an opportunity to reengineer our financial 
business processes, and increase the visibility of our 
financial position.
    VA acknowledges its current improper payment rate and is 
taking actions to increase IPERA compliance, while at the same 
time providing veterans the benefits and the services that they 
have earned and deserve. Those actions include continuing to 
ensure that the improper payment definition is applied 
correctly and may result in an increase of reported improper 
payments in some programs in 2016 as well. However, most of 
these new improper payments are instances where VA paid the 
right person the right amount for goods and services received 
and do not represent a loss to the government.
    Thank you for the opportunity to appear before you today 
and for your continued support of veterans. I look forward to 
your questions.
    [Prepared statement of Ms. Park follows:]
    
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    Mr. Meadows. Thank you, Ms. Park.
    Ms. LaCanfora, you're recognized for 5 minutes.

                TESTIMONY OF MARIANNA LACANFORA

    Ms. LaCanfora. Chairman Meadows, Ranking Member Connolly, 
and members of the subcommittee, thank you for inviting me to 
discuss our efforts to reduce improper payment. I'm Marianna 
LaCanfora, assistant deputy commissioner for Retirement and 
Disability Policy and chair of Social Security's Improper 
Payments Oversight Board.
    Few government agencies touch as many people as we do. This 
fiscal year, we expect to pay more than $906 billion in Social 
Security benefits to more than 60 million people and about $59 
billion in supplemental security income to more than 8 million 
people. For fiscal year 2014, we did not meet our accuracy 
targets for the SSI program or for the Old-Age, Survivors, and 
Disability Insurance Program. Pursuant to IPERA, we sent a 
remediation plan for each program to Congress. Although we 
didn't meet our targets for the OASDI program, we have 
maintained a very high payment accuracy rate in that program. 
In fiscal year 2015, for example, 99.6 percent of the benefit 
dollars we paid were free of overpayment.
    Our greatest challenge is the SSI program. SSI is a means-
tested program for aged, blind, or disabled individuals with 
limited income or resources. The SSI program has inherent 
complexities. We're required to consider many factors each 
month, including income, resources, and living arrangements, in 
deciding whether and how much a recipient should receive. Since 
these factors can change often, the program's design makes it 
vulnerable to payment errors. The SSI overpayment accuracy rate 
for 2015 was 93.9 percent, our highest rate since 2003. We've 
made progress, but we must continue to target the root causes 
of improper payment and further improve accuracy.
    Our remediation plan focuses on strategies to address these 
root causes. For example, we're combating errors concerning 
financial accounts by using an automated process to verify bank 
account balances with financial institutions to identify access 
resources.
    In addition, last year's Bipartisan Budget Act gave us 
several important new authorities. Perhaps most critical will 
be the ability to obtain timely and accurate earnings 
information from third-party payroll providers. We're working 
now to implement that and other provisions.
    We're also identifying new sources of reliable and timely 
data that will allow us to lessen our reliance on beneficiary 
reporting. Also worth noting is our creation of a data analytic 
center of excellence to inform our efforts and help measure 
progress, as well as two Federal communities of practice; one 
for data exchange and another for improper payment prevention. 
Through these efforts, we bring together more than 30 agencies 
to collaborate and share best practices.
    Before concluding, I'd like to emphasize our need for 
funding. We're among the most efficient and effective agencies 
in the Federal Government. Our administrative costs represent 
only about 1.3 percent of the benefits we pay. Our medical 
continuing disability reviews save $8 on average over 10 years 
for every $1 invested, and our SSI nonmedical reviews save $3 
for every $1 invested.
    While we appreciate the recent increases in program 
integrity funding, we also need adequate and sustained funding 
to provide basic Social Security services. Since 2010, this 
part of our budget has decreased by nearly 10 percent after 
adjusting for inflation, while the number of our beneficiaries 
has increased by 12 percent. Consequently, we are seeing 
service degradation in many areas, including increased wait 
times in our field offices and on our telephones. Moreover, 
we're dealing with an unprecedented backlog in our program 
service centers where we handle much of the work to prevent 
improper payment.
    The fiscal year 2017 President's budget request would allow 
us to increase our program integrity efforts, while providing 
quality service to the millions of people who depend on us. 
Conversely, under the House Appropriations bill, we would be 
forced to furlough all employees and close field offices around 
the country for up to 2 weeks next year. It's imperative that 
we receive adequate funding in fiscal year 2017.
    We appreciate your interest in our efforts to maintain high 
payment accuracy and quality service. Thank you for inviting me 
to testify, and I'd be happy to answer questions.
    [Prepared statement of Ms. LaCanfora follows:]
    
    
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    Mr. Meadows. Thank you.
    Mr. Schramek--I tell you, for a guy from North Carolina, 
that's a tough one to be able to pronounce.
    You're recognized for 5 minutes.

                   TESTIMONY OF JEFF SCHRAMEK

    Mr. Schramek. Thank you. Good afternoon, Chairman Meadows, 
Ranking Member Connolly, and members of the subcommittee. Thank 
you for the opportunity to discuss the Department of Treasury's 
efforts to help federally funded programs to prevent improper 
payments through the Do Not Pay Business Center.
    The Improper Payments Elimination and Recovery Improvement 
Act of 2012, IPERIA, directed OMB to administer the do-not-pay 
initiative. To implement section 5(d) of IPERIA, OMB designated 
the Department of Treasury to host the do-not-pay initiative 
working system. Treasury's Bureau of the Fiscal Service carries 
out this assignment, which is consistent with our mission to 
promote financial integrity within the Federal Government.
    The Do Not Pay Business Center, which I will refer to 
simply as Do Not Pay, is a broader government effort--
governmentwide effort that is designed to prevent improper 
payments. Four agencies, represented by some of my colleagues 
here, have robust payment integrity programs. This direct 
support puts them in the best position to address improper 
payments in their own programs. Though we do partner with these 
agencies, Do Not Pay can have a bigger impact on agencies that 
do not have their own dedicated analytic center. In short, we 
fill an important gap.
    Do Not Pay's goal is to provide timely, accurate, and 
actionable information in a secure environment. Do Not Pay 
provides a secure Web-based portal that automatically matches 
pay data to sources that can indicate a payment may be 
improper. In addition to the portal, Do Not Pay provides 
advanced analytic services to detect systemic improper 
payments. Fifty-seven agencies currently use the portal, and 
since 2015, we completed 21 analytics projects for nine 
agencies.
    Our work has resulted in a number of successes. For 
instance, this year, agencies identified nearly $18.4 million 
of improper payments through the use of the Do Not Pay portal. 
This is more than doubled the amount reported in fiscal year 
2015 and is significantly more than in previous years. This 
increase is the result of two factors: More agencies are using 
the portal, and through technology we introduced in 2015, 
agencies can report the amount of improper payments more 
easily. Do Not Pay developed a customized function that helped 
one agency this year stop nearly $34 million in improper 
payments before the payments were disbursed.
    In addition, through its partnership with OMB, Do Not Pay 
has helped agencies meet IPERIA's requirements. We did this 
providing agencies centralized access to the data sources 
identified in the law, including information about deceased 
individuals, government vendors, Medicare and Medicaid 
providers, and individuals and entities that owe a delinquent 
debt to the United States.
    Do Not Pay has accomplished much by working closely with 
OMB and the agencies, and we are committed to continuous 
improvement and innovation. Our partnership with agencies are 
critical. Without them, we could not test advances in our 
analytics, such as new risk models and better data matching 
techniques on real world challenges facing those agencies. 
Through our services and existing data sources, Do Not Pay 
helps agencies identify improper payments that their internal 
processes may have missed.
    In addition, the President's fiscal year 2017 budget 
contains two proposals that would expand Do Not Pay's data 
sources. Specifically, one proposal would amend the Social 
Security Act to provide do-not-pay access to the full debt 
file. A second proposal would allow programs to access the 
national directory of new hires through Do Not Pay, if those 
programs are already authorized to use the data.
    In sum, Do Not Pay's data matching and advanced analytics 
have evolved significantly, and agencies' use of Do Not Pay has 
grown substantially. Do Not Pay is viewed more and more as an 
important tool for improving payment integrity and ensuring 
that the right recipient receives the right payment for the 
right reason at the right time.
    I welcome any questions you may have.
    [Prepared statement of Jeff Schramek follows:]
    
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    Mr. Meadows. Thank you so much.
    And the chair recognizes himself for a series of questions.
    Before I get started on those, however, all of you, thank 
you for being here. Thank you for your testimony. You have 
staff that is probably behind you that has done much of the 
yeoman's work to get that done, and so I want to acknowledge 
them, as I'd like to acknowledge both the majority and minority 
staff on the work that we get done. It is often really that 
hard work that gets overlooked, and so I wanted to make sure 
that we did that.
    The other part of that that I would say is, is because of 
some of the questions on improper payments become 
uncomfortable, I want to make sure that no one takes it 
personally as an indictment on their work as much as, 
hopefully, a benchmark for starting to make progress going 
forward.
    Does that make sense?
    So let me go ahead. Mr. Mader, let me come to you first. 
And as we look at OMB and the role that we have, there are some 
statutory requirements in terms of reporting improper payments 
and the reports that need to come along with that. It appears 
that we have a little bit of a difference, our staff talking to 
your staff, in terms of what that report may or may not look 
like or should look like, because I think you refer more to 
paymentaccuracy.gov, which I would suggest is less than robust 
and illuminating in terms of its full detail.
    And so can you help me understand when we are going to see 
a more robust report from OMB as it relates to improper 
payments and complying with the statute?
    Mr. Mader. So a little history to add to the question. My 
predecessor, back in 2010, in implementing the statutory 
requirements, I guess, made that decision back at that time to 
use the--to create the paymentaccuracy.gov Web site as the way 
to satisfy the requirement that's in the legislation. That 
required an annual report to Congress, and they implemented 
that payment accuracy. And that, you know, started in 2010, 
2011. So they were updating it.
    I arrived in the summer of--as, you know, the summer of 
2014. We updated it in 2015. I assumed that what was being 
reported on paymentaccuracy.gov was meeting the letter and the 
spirit of the legislation, only to discover this summer when 
your staff called us and said, did you know that you weren't 
doing this and you weren't doing that, that we realized that 
what started in 2010 was not meeting the--both the spirit and 
the letter of the law.
    To put it in context, what we were displaying was probably 
roughly 93 percent of the improper payments, but we were 
missing almost 7 percent of that. And there were a couple of 
other data elements that the statute required that we were not 
displaying. So we had a great conversation with your staff back 
the summer that I participated in personally with my staff, all 
of who are new and so weren't around in 2010. So that's on me 
to make the correction.
    And right after the conversation and in our subsequent 
analysis, we said, okay, we're going to have to totally revise 
this Web site. So we've been, since the course over the last 
couple of months, looking at, okay, what are the requirements? 
What does it look like now? What do we need to do to meet the 
spirit and the letter of the law? We're ready to launch, in the 
next couple of weeks, a complete redo of paymentaccuracy.gov in 
a way that will capture and display the data so that not only 
the annual report to the Congress, but I think--Mr. Chairman, 
your earlier point in your opening statement, this is something 
that the American public needs to see. So, you know, not only 
will it meet the legislative intent of the annual report, but 
we believe it will also provide the transparency. We intend to 
have that done and updated with the new data in the January 
through March timeframe.
    Mr. Meadows. Okay. Well, I don't want to prejudge your new 
innovation, so I won't. But I'm going to withhold, I guess, 
comment until we see what you come up with. Because I think, 
clearly, when we look at a report, we're about to put out a 
report. That's the kind of report that we should be getting 
from you. The data on the payment accuracy Web site, you know, 
doesn't really correspond.
    And so as we start to integrate that--my good friend, Mr. 
Connolly from Virginia, knows more about the IT side of things 
than I ever did,--but when we look at the Data Act, when we 
look at FITARA, when we look at all of these other issues, we 
made a bipartisan commitment to have good quality data that 
actually gives us actionable things. And to that extent, I 
don't want to create something that's new that doesn't follow 
along those two lines and implement that data. But the other is 
I don't want to suggest that just having a Web site is a 
report.
    And so I'm going to be optimistic. You know I'm a trusting 
individual, and--but we will verify. So I'll wait to see what 
you have coming up.
    In January, is that when you said we can expect----
    Mr. Mader. Well, so our plan was to actually, starting next 
week--and I'm going to get weekly reports from the project 
team--to actually start now working on what this new display of 
data will look like. Maybe what we ought to be doing is coming 
up and meeting with the staff, sort of walking them through 
what we're about to do. Because what I don't want to do is 
spend a lot of time and money between now and, you know, March 
and then go, like, well, that's not meeting your needs.
    Mr. Meadows. Yeah. If you can do that, I think that will be 
great.
    Mr. Mader. So we can do that. I mean, we have--Mr. 
Chairman, we also have an executive order that requires, you 
know, us to do this as well. So, you know, we're going to have 
to do it for ourselves. You know, if the Congress wants, you 
know, a different written report, we certainly can do that. But 
we have to fix the data.
    Mr. Meadows. Yeah. And I'm not looking for redundancy. In 
fact, if anything, I'm looking for us to not be redundant. And 
I guess what I'm saying is, if that meets our needs, we'll all 
be together and be happy about it. The more we can have it 
online and the less we have it in terms of a written report, 
the better off, I think, we all are. I just want to make sure 
that it's in keeping with finishing.
    I want to ask one other question, then I'll recognize the 
ranking member. And we've got a series of things that I'd like 
to go over.
    But, Ms. Conley, let me come to you. And you had a great 
opening statement, and we look at the numbers that, you know, 
your--the 800-pound gorilla in terms of improper payments, in 
terms of moneys going out, you and the Social Security 
Administration. The problem is, is each time we have this, we 
hear that it is a top priority, and each time the number 
continues to rise. And we have different hearings where, you 
know, we get stakeholders that are blamed or States that are 
blamed and, yet there are times when the States want to come in 
and help and there seems to be a reluctance from different 
agency heads on doing that.
    My question is real simple. If it's the top priority, is it 
better suited for someone else to look at improper payments 
where we start a trend that goes down versus one that continues 
to go up? Because we continue to--we're not making progress, I 
guess. And I'm saying that in a kind way but in a frustrating 
way. This is our third improper payments hearing, and it 
continues to go up, and we don't seem to be making much 
progress.
    What do we need to do?
    Ms. Conley. Mr. Chairman, thank you very much for your 
question. These are critically important programs, and we take 
them very seriously, as well as program integrity, relating to 
each of our programs.
    These programs are large and they are complex----
    Mr. Meadows. Listen, I'm a numbers guy. I get all of that.
    Ms. Conley. You understand. Yes, sir.
    Mr. Meadows. And I understand that you can talk about 
percentages when you have a big budget, because the percentage 
is small but the dollar is big. I get that.
    I guess what I'm saying is, is there someone else that 
needs to look at this to be able to figure it out where we 
start to get the trend, we're not making progress? Improper 
payments at HHS continue to go up at a disproportionate rate to 
the amount of benefits that are being paid out. And that's my 
concern, is--it'd be different if it were--we were shrink--you 
know, the numbers were going but the percentage--but that's not 
happening.
    Ms. Conley. So if I may follow up on that. One, I think 
it's important to note, as Mr. Mader indicated in his opening 
remark, our Medicare fee-for-service program, our rate has come 
down from last year----
    Mr. Meadows. Right.
    Ms. Conley. --to this year, and we were well under our 
target. It is still a very large program. So while we're making 
progress there in measuring improper payments and complying, 
it's--these are still very large numbers.
    We've made significant improvements in this program, and 
you can--we use the improper payment rates. We're very keen on 
the trajectory, whether we measure them uniformly and then we 
look to these trends.
    And in the case of fee-for-service, we can see that there's 
some key actions that we're taking in the fee-for-service 
program that are really paying off and driving that rate down. 
So as part of our root cause analysis for fee-for-service, we 
determine----
    Mr. Meadows. So it went down by what, $2 billion is what 
we're looking at? So I'm looking at the numbers. But Medicare 
part C went up by $2 billion, Medicare part D went up by $1 
billion. I mean, so--Medicaid went up by $12 billion. And so 
when you look at it, it's easy to highlight the one where we've 
made a little--and I guess what I'm saying is, when you look at 
the overall number, we're now up at $89 billion. And, again, 
that's real money. I mean, it's not my money, it's not your 
money, it's the American taxpayer's money.
    So here's what I would like, and I'm going to recognize the 
ranking member. I need from you, specifically, what we're going 
to do different between now and next year this time when we 
have this same report that comes out where we start to reverse 
the trend. I need a specific--not that it's important, not that 
it's this. I need how are we going to address these particular 
issues?
    And I'll recognize the ranking member, Mr. Connolly.
    Mr. Connolly. I thank my friend. And I echo a lot of what 
he had to say. I will say, however, Congress can't have it 
two--both ways. We can't ding on you for not getting down that 
number to the lowest possible number when we're not willing to 
invest in the tools and resources necessary to recover those 
dollars or prevent them in the first place.
    And we know that in certain respects, certain investments 
have huge payoff. My friend and I have talked on a bipartisan 
basis on our committee about, you know, you invest more money 
in GAO, for example, and it has a big payoff. We invest in--
I'll speak only for myself. We invest in IRS. It has a big 
payoff. So if you're looking for enhancing revenue and getting 
down----
    Mr. Meadows. Well, they'll just get your tax return. I 
mean, we can almost balance the budget on----
    Mr. Connolly. I'll take my chances.
    So anyway--so we in Congress also need to take 
responsibility for our part in this. But I know that my friend, 
Mr. Meadows, and I share a goal, though, that this is something 
we could do something about it, it seems to me, on a bipartisan 
basis.
    And, actually, in an odd way, if I can use this phrase, 
it's free money. Every dollar we recover that's not--or we 
avoid as an improper payment, however you define it, is a 
dollar we don't have to raise in new taxes. It's a dollar we 
don't have to cut from a critical investment that we know we 
need for the future. It's a dollar we don't have to have from 
sequestration. And why we don't pay more attention to this as a 
Congress, I don't know, or as a government. And I just thank my 
friend for continuing this tradition.
    My first improper payment hearing was in this room on 
this--the predecessor subcommittee with our friend, Todd 
Platts, who was the Congressman from Pennsylvania at the time, 
who took this very seriously and set the kind of bipartisan 
cooperative tone I think we need on this.
    Mr. Mader, what is the universe, total universe, of 
improper payments we're talking about right now?
    Mr. Mader. So the last----
    Mr. Connolly. Dollar figure.
    Mr. Mader. So the dollar figure fiscal year 2015 is $136 
billion.
    Mr. Connolly. Okay. Now, I want to say, when I first went 
to my first hearing on this, it was roughly about that. It 
might have been about $150 billion then. Sound right, 5 years 
ago?
    Mr. Mader. So 5 years ago, the percentage was higher, the 
dollar amount was lower.
    Mr. Connolly. A little lower. Okay. So it made some 
progress?
    Mr. Mader. We've made progress on the rate, yes.
    Mr. Connolly. Okay. Of that $136 billion, how much is 
Medicare fraud?
    Mr. Mader. I would have to defer to my colleague from HHS 
on that. I don't keep that data.
    Mr. Connolly. All right. Ms. Conley? And you're talking to 
your cousin here, don't fudge.
    Ms. Conley. No relation, right?
    So you raise a very important question and important topic, 
because I think when we're talking about the extent of improper 
payments, it's important to go back and understand what 
improper payments are and what they are not.
    So an improper payment is making sure that--an improper 
payment can arise from a payment to the wrong person or on 
behalf of the wrong person, in the wrong amount, for the wrong 
benefit, or without documentation.
    Mr. Connolly. No, we understand. The reason I'm trying to 
get at fraud is this: There's different strategies. Right?
    Ms. Conley. Right. That's right.
    Mr. Connolly. So the nature--what's behind my question 
isn't to ding on you for--it's a big program and there's going 
to be fraud. Human nature is going to be human nature and 
people are going to cheat.
    So working with Mr. Mader or with the Treasury Department, 
we can come up with systems that start to reduce the number of, 
oops, you know, we double billed, we double paid. We thought 
you were 65; you weren't. Whatever it is. We thought you were a 
veteran, and it was your cousin or your neighbor; a mistake. It 
happens. And if we can make systems more and more efficient and 
fool proof, we can cut down on that error rate, save taxpayers' 
dollars.
    Fraud's a different matter. Fraud, I've got to go after it. 
I've got to have investigative resources. I've got to have 
prosecutorial resources. I've got to persuade U.S. attorneys 
that this is really a high priority, and it can become win-win. 
You know, I've got to make some serious investments. That's a 
very different kind of improper payment, but I've got to do 
both.
    So I need to know your universe. What is--of the $136 
billion, how much of that is Medicare fraud?
    Ms. Conley. We do not have a commonly accepted methodology 
for measuring the extent of fraud. We do, though, have other 
processes whereby we assess the various risks that fraud could 
occur.
    Mr. Connolly. Ms. Conley.
    Ms. Conley. Yes, sir.
    Mr. Connolly. I can't believe you're a relative.
    Is it not somewhere around $50- or $60 billion, best 
estimate, Mr. Mader?
    Mr. Mader. Well, I'm not sure of the--the $136 billion, I 
don't know, but let me see if I can answer your question maybe 
a little bit differently.
    So of that $136 billion, $45 billion, 33 percent of that, 
is related to documentation errors. And I dare say it's 
probably not fraud. Okay?
    Mr. Connolly. Right.
    Mr. Mader. If they filled out the form or they didn't fill 
out the form. And what's also interesting to note is that this 
issue--and it's a lot around insufficient documentation, you 
know, 33 percent of that total, actually isn't required to be 
reported as improper payments under the underlying statute. It 
was actually introduced in the previous administration.
    And that's not making an excuse, but I think, Congressman 
Connolly, makes--the point that you're making is that there's 
ways to deal with those kinds of errors and then there's fraud. 
And a lot of the things that we're talking about in the way of 
program integrity initiatives or some of the examples around Do 
Not Pay, merely speak to that, how do I--how do I get to the 
documentation errors? How do I do a better job of getting it 
right the first time? Because if I picked a sample, and a form 
is missing, improper payment.
    Mr. Connolly. Right. But we know that fraud occurs. For 
example, I know of one U.S. Attorney's Office that recovered--I 
think, almost identified and helped recover almost $3 billion 
in Medicare fraud. That's one. We have 99 U.S. attorneys. So, I 
mean--and I--this is not a new question, because I remember--
unless I'm smoking something, but at this very room, this very 
subcommittee, we've looked at a figure of estimates of around 
$50- to $60 billion. It could be more. We don't know.
    So I'm trying to look at the whole pie. That pie is $136 
billion, 43 percent are documentation error. So what percent do 
we think are fraud?
    Mr. Mader. We're going to have to come back and--I don't 
know and I don't--you know, I don't want to guess.
    Mr. Connolly. All right.
    Treasury Department, do you want to help guess with me? Do 
you know? Any idea? Give me the universe of potential fraud. I 
mean, out of this pie.
    Ms. Schramek. I don't have the universe.
    Mr. Connolly. Don't have the universe.
    Ms. Schramek. Not for fraud.
    Mr. Connolly. All right.
    Well, Mr. Chairman, I'm frustrated by this because I don't 
know how we devise strategies that try to get at this if we're 
not willing to put some percentage or number. And I understand 
it's an estimate, a guesstimate, fraud's--how much potential 
fraud is going on out there I know is a tough thing, because--
well, to quote Donald Rumsfeld, there are the known knowns and 
the no unknowns and the unknown unknowns, and okay.
    But it's kind of important we get our arms around this so 
we at least, for planning purposes, declare a universe so that 
we can devise strategies to reduce it.
    Mr. Meadows. And I would agree with the gentleman.
    Mr. Connolly. Yeah. But let me just say a final thought 
here. Boy, would I love--I mean, the chairman asked that you 
come back to us with strategies that we can sort of sink our 
teeth into in the new year. I would love to see a--sort of a 
spitball strategy that says--okay. In theory, we know we can't 
ever get to zero, but what would it take, in theory, to get 
that $136 billion to zero? Because every one of those dollars 
is a dollar for new investment or a dollar where we avoid 
having to put new burdens on taxpayers or a dollar to reduce 
the debt if we want to dedicate it to that. I mean, there are 
lots of possibilities with this, that's why getting the fraud 
piece is important.
    And I'd love to, at some point, have somebody do some 
spitballing about this. I mean, I don't want to raise false 
expectations. It can be zero. But surely, we can do better. 
Surely, as the chairman indicated, and I echo his sentiments, I 
mean, it's a little bit like Groundhog Day when we have these 
hearings, because I thought we might be making not so much 
incremental progress as maybe spectacular progress with new 
data systems and new technology investments and the like.
    So I think we approach this in the spirit of trying to 
partner with you, that get our arms around this collectively as 
a government, because a lot of good can come out of this. And 
bad things happen when this is left unaddressed.
    So I wish you'd get back to us with the fraud estimates so 
that we have--we can work with you in devising strategies and 
try to fight for getting the resources you need for those 
strategies.
    Thank you, Mr. Chairman.
    Mr. Meadows. I thank the gentleman.
    So let me--let me see if I can summarize that, because I--
if we're going to address this--and we have it titled improper 
payments for a reason, because we don't put it in a bucket. And 
that--I mean, we know that it's improper.
    Here's what I would like to ask you to do, and it gets, I 
think, to the gentleman's question, is if we can look at a 
couple of subbuckets. Coding errors is one--so I'm going to 
take HHS, because I know that probably better.
    So we know that the RAC audit say, okay, you've got coding 
errors, you've got issues where you've got the wrong date. And 
it shows as an improper payment when, indeed, it is--really, 
it's probably a proper payment that's improperly coded, but yet 
it shows up and so it drives the numbers up. That's part of it.
    The other part of that is, is there are--is the suspected 
activity that may not be fraud, but we're not sure. And so 
that's got to go in a bucket, because you're going to have your 
general counsel who say you can't say it's fraud because we 
can't prove it's fraud. And we understand the legal 
requirements here. But if you can put it in a bucket.
    Then if we can look from a historical standpoint, and 
that's what the gentleman is talking about, is a percentage of 
those that are collected, how much do we go after for fraud? 
And I'm willing to work with the gentleman to look at these 
numbers to not say it has to go back to Treasury.
    So, you know, if we're looking at SSA, and you're saying, 
well, we're having a tough time, and you do a better job on 
that, I'm willing to invest the political capital to say, okay, 
we have to return it. It's part of what I talked about with Mr. 
Mader on real estate. You've got one group that disposes of it, 
but they don't get the money back, so there's no incentive to 
do it. And so we're willing to work in a bipartisan way. We've 
got to get the number down. And I'd rather have accurate 
numbers and accurate reporting versus all of that.
    Does that make sense? All right.
    I'm going to ask for a unanimous consent to have Mr. Palmer 
join us, because I've got to run to a WRDA hearing on one 
critical area that we're trying to address when he comes in. 
And I may--I didn't want to interrupt the gentleman from 
Missouri.
    Mr. Clay, you're recognized.
    Mr. Clay. Thank you.
    In 2009, President Obama signed an executive order to 
reduce improper payments by, quote, ``intensifying efforts to 
eliminate payment error of waste, fraud, and abuse in the major 
programs administered by the Federal Government.''
    Pursuant to this executive order, in 2011, Department of 
the Treasury established a Do Not Pay Center that offers tools 
and resources for agencies to use for the reduction of improper 
payments.
    Mr.--pronounce your name.
    Mr. Schramek. Mr. Schramek.
    Mr. Clay. --Schramek, what services does the Do Not Pay 
Center offer agencies to help curb improper payments?
    Mr. Schramek. Thank you. We offer a couple of services. The 
first service is that we provide data sources to agencies so 
they can do a single online search, like a Google search. They 
can do--if they have more searches they need to do for 
prepayment or preeligibility, they can send over a file of 
those information that we can match against data sources. And 
then before they make a payment, they can send that file again 
to match--to make sure nothing has changed from when they 
looked the first time on their validation.
    We also, through IPERIA, have entered where payments go 
across to data sources before they go out the door, to provide 
information back to the agencies on if those payments are 
proper and they can adjudicate them. And then our last piece is 
we offer analytic services to agencies so that--because we have 
most of the payment data that Treasury disburses, we can look 
at payments within an agency, within agency--within programs 
within an agency and even across agencies.
    Mr. Clay. And how many agencies have signed up with the Do 
Not Pay Center?
    Mr. Schramek. So we have 57 agencies that are currently 
signed up with the do-not-pay program.
    Mr. Clay. And have these services been effective at 
stopping improper payments?
    Mr. Schramek. They have been, as we've got more and more 
agencies onboard. So just this year, we had accumulatively 
identified $25 million, and this is significantly higher, 
almost more than double, than we did last year because of the 
use of this program. Partially because agencies, when we give 
them the information back to determine if a payment is proper 
or improper, they--we gave them the ability to tell us how much 
that back is. So that is helping us to more and more determine 
how much of those payments are identified in the agency side.
    Mr. Clay. And, Mr. Schramek, I'm pleased to hear that the 
Do Not Pay Center has saved agencies millions of dollars in 
improper payments. There are still billions of dollars in 
improper payments that are spent every year.
    How can the Do Not Pay Center use its resources to save 
additional improper payment dollars?
    Mr. Schramek. So it's very critical for us to continue to 
work with the agencies and with OMB to do this process. So the 
data sources we have, we will continue to provide the agencies 
and talk to them about which ones are best for them and get 
more agencies to use those data sources. We've also put--and we 
agree with the President's budget for additional data sources.
    So right now we only have the public version of the Death 
Master File, and when we get the private version, that would 
help us as well. And then access to the National Directory of 
New Hires database would give us that information as another 
tool to provide agencies.
    Mr. Clay. And do some agencies prefer to use their own 
methods to identify improper payments?
    Mr. Schramek. Agencies do have other programs. Do Not Pay 
is one of the tools the agencies get to use in identifying 
improper payments. Treasury cannot make the decision of whether 
a payment is improper or not. We provide the information to the 
agencies and then we work with the agencies to determine if 
it's improper or not.
    Mr. Clay. All right. Thank you for that response.
    And, Ms. LaCanfora, I heard you say that currently you 
allow recipients to volunteer data to make a determination on a 
monthly basis to determine how much they are paid. Isn't that 
an easy way to game the system at SSI?
    Ms. LaCanfora. You're right. What I said in my testimony 
was that the Supplemental Security Income program, or the SSI 
program, is our greatest challenge because we rely very heavily 
on beneficiaries to tell us information. And the structure of 
the program is such that we need to track lots of different 
factors, your income, your resources, who you live with, all of 
your living arrangements, lots of different data points that we 
need that we rely on beneficiaries to tell us about. So one of 
our greatest strategies that holds the most potential is to try 
to move away from reliance on beneficiaries and move more 
toward data.
    And thank you to the Congress for giving us the Bipartisan 
Budget Act. One of the most powerful provisions in there is our 
ability to use third-party payroll data so that we do not need 
to rely on IRS data, which oftentimes comes very late in the 
process. We can get timely wage data from payroll providers, 
and we are working to implement that now. So moving from self-
reporting to data is where we think we're going to get a 
tremendous payoff in improper payment prevention going forward.
    Mr. Clay. And how much, an estimate in savings, do you 
think you'll be able to identify?
    Ms. LaCanfora. I don't have an exact number, but I will say 
it's in the billions, with a B----
    Mr. Clay. Okay.
    Ms. LaCanfora. --because wages or earnings are the 
greatest--one of the greatest sources of improper payment at 
our agency.
    Mr. Clay. Thank you.
    Mr. Chairman, I yield back. My time is up.
    Mr. Palmer. [Presiding.] The gentleman yields back.
    The chair now recognizes itself for questions.
    To follow up on Mr. Clay's questions about the apparent 
inability--or to identify people who have died, I mean, there 
are companies in the private sector that can track everything, 
I mean, from what laundry detergent we buy to what Web sites we 
visit, I mean, what political party we affiliate with. How is 
it--why is it so difficult to gather information when people 
are deceased so that you stop the payments?
    And that's to Ms. LaCanfora. I'm having trouble seeing over 
this. I'm just average height, so----
    Ms. LaCanfora. Thank you for the question. We actually 
receive 2.5 million death reports each year. So our death data 
is pretty comprehensive. We receive information from States and 
from funeral directors and from a host of other places, 
including families who report death records to us. We share 
that data with nine Federal benefit-paying agencies directly so 
they have access to that today.
    We are restricted by law from sharing all of our death data 
with Do Not Pay because the law specifically allows us only to 
share that data with the Federal benefit paying agencies. So I 
think Mr. Schramek mentioned a proposal in the President's 
budget that would authorize us to share all of our death data 
with Do Not Pay.
    Mr. Palmer. Are they calling votes?
    Okay. All right. I'm going to continue with this. You said 
there were 2.5 million deaths reported to Social Security. Is 
that correct? Do you have any idea how many deaths there were 
nationwide?
    Ms. LaCanfora. Yeah. That number is comparable to the CDC 
estimates on the number of people who are actually deceased. 
There's always going to be a few deaths that we don't get 
because there's strange things happening, but by and large, our 
death data is comprehensive. I will say, however, that 
historically, it hasn't always been comprehensive, because our 
death reporting processes have gotten much better over time and 
there's something really important in the process that we have 
called electronic death registration, otherwise known as EDR. 
It's a very high-quality reporting process that makes our death 
records virtually error free, but that is a relatively new 
process for most States and it's not rolled out in every State. 
So there's also a President's budget proposal to expand 
electronic death registration to ensure that our death records 
are complete.
    Mr. Palmer. So over the last 2 or 3 years, and the last 
report I saw was for 2014, and it was what, $3 billion, 
something in that range, that went out in death benefits 
improperly paid? Did that number decrease last year?
    Ms. LaCanfora. For the Social Security Administration, 
death is actually not a leading cause of improper payment. In 
fact, we use our current set of death records to prevent----
    Mr. Palmer. I understand that. I'm just asking you, because 
you just said that--you lauded where you are on your death 
reporting. And I come from a think-tank background prior to 
that engineering degree. I'm very linear in my thinking. So if 
you got from A to B and B is where you needed to be, there 
should be some result. Okay.
    So have we reduced the amount of improper payments related 
to death benefits?
    Ms. LaCanfora. Yes, but I want to just correct. So the $3 
billion I think that you cited is not related to death. That's 
our overall improper payment rate for the OASDI program. The 
death-related overpayment amount for Social Security is much 
smaller than that. It's actually less than 1 percent of all of 
our improper payment. I think the broader concern is sharing 
that data with other agencies that might use it. But improper 
payments related to death are tiny at the Social Security 
Administration.
    Mr. Palmer. Well, going back on the report that I read last 
year--actually, I'm on the Budget Committee and that's when I 
brought this up--65 percent of the improper payments were 
attributed to Medicare fee-for-service, Medicaid, and earned 
income tax credit program. It is about $81 billion. And in 
2014, I think we sent out about $125 billion in improper 
payments. Last year, I think it was about $130 something 
billion, and prior to 2014, it was a lower number. So it seems 
to be getting worse, not better. And one of the things that I 
found interesting was that the Treasury hasn't corrected the 
issue with the earned income tax credit and it appears to be 
getting progressively worse.
    Can you address that? Are you qualified to address that, 
Mr. Schramek?
    Mr. Schramek. Yes, sir. At the Bureau of the Fiscal 
Service, I don't have access to the information on the IRS side 
of the tax information.
    Mr. Palmer. Okay. Sounds like that the people I need to 
talk to are not here, because I'd also like to know why--what 
statutory limitations there are on Treasury that prevent us 
from requiring States estimating improper payments in terms of 
TANF benefits.
    Can you answer that?
    Mr. Schramek. Yes, sir. That would be at IRS.
    Mr. Palmer. All right. Well, given that they've called 
votes, let me ask that question to Health and Human Services on 
the TANF benefits. Ms. Conley.
    Ms. Conley. Sir, I'm sorry, could you repeat the question 
about TANF?
    Mr. Palmer. Well, in my doing my background on this, I 
found that there's some statutory prohibition against the 
States reporting improper payments for TANF benefits. And I 
apologize, I was working on earned income tax credit with 
Treasury and now I've switched to TANF, and this question 
should have been directed to HHS.
    What are the statutory limitations that keep the States 
from reporting improper payments on TANF benefits?
    Ms. Conley. Yeah. Thank you very much for your question and 
for clarifying. With regard to TANF, the statutory framework 
for TANF, this is the Temporary Assistance for Needy Families, 
is set up such that we don't have the authority to either 
request or compel States to calculate improper payments, nor do 
we--are we authorized to compel them to provide us with the 
information that would be necessary to develop an improper 
payment rate for TANF.
    And we--so even though we don't have an error rate 
methodology because of the statutory constraints, we do still 
execute program integrity activities with TANF. For instance, 
the Single Audit Act Amendments of 1996, were recognized in the 
TANF statute of 1996. And those--the single audit basically is 
an annual audit process at the State level of the TANF funds 
that are administered by the States, and they're subjected to 
an annual audit process by either the State auditors or 
independent audits. And we go through those audit findings and 
resolve those findings and ensure that the States are following 
up to strengthen the integrity of the TANF programs at the 
State level.
    Mr. Palmer. So do we know how much we paid out in improper 
payments in TANF benefits?
    Ms. Conley. So there is not a calculation of an error rate 
for TANF, because of those statutory limitations that we have.
    Mr. Palmer. Well, that doesn't make any sense to me that we 
don't at least have an estimate from the States. I mean, is 
there no concern of making improper payments using Federal 
money? I mean, what do we need to do to correct that?
    Ms. Conley. So perhaps we could reconsider, as TANF is 
reauthorized, to think about an error-rate methodology process 
and whether or not that makes sense given the statutory 
framework for TANF.
    As I mentioned, while we don't have an error rate, there 
are other things that are going on in the TANF program, the 
oversight of it, as well as the work that is happening at the 
State levels to ensure we're complying with the program 
requirements. TANF has very high level Federal requirements. 
They're very broad and overarching, and so the States--the 
State-administered program and the States develop the various 
compliance requirements at a more detailed level.
    Mr. Palmer. Well, here's my concern about this and the 
whole issue of improper payments, is that being on the Budget 
Committee we do everything in a 10-year window. And if we use 
the last 3 years, say, for example, as an average, we're 
sending out somewhere in the range of $110- to $120 billion a 
year in improper payments. In that 10-year window, that's $1.1, 
to $1.2 trillion. That's a lot of money. You know, it has a big 
impact on our ability to do business, and I think particularly 
considering that we're approaching $20 trillion in debt, it's 
incumbent upon us to do everything that we can to make sure 
that the money we spend is spent properly.
    I want to shift back to Treasury, to Mr. Schramek, if I 
can. Treasury was required to issue a report on the data 
analytics performed at the Do Not Pay Center under the Federal 
Improper Payments Coordination Act of 2015. It is my 
understanding that the report has not been issued. When do you 
expect to issue that report?
    Mr. Schramek. Now that report has been issued.
    Mr. Palmer. It has? When was it issued?
    Mr. Schramek. This past week.
    Mr. Palmer. Okay. We need to make sure the committee gets a 
copy of that report.
    Let me ask you this: What are the current data analytics 
capabilities of Do Not Pay?
    Mr. Schramek. So in the Do Not Pay program, our current 
analytics come around a couple of different mechanisms. One, we 
do data source matching and provide that information to 
agencies. Two, because we have access to payment data that 
agencies have provided us, we use that data to provide 
information related to data-quality errors of the payments that 
they provide to Treasury to make sure the data is better. We 
look at if there's duplicate payments or if there have been 
duplicate eligibility information and provide that to agencies 
to validate. For example, if somebody paid something twice or 
paid the same amount twice, is that proper or not? And we're 
also looking across the Federal Government for agencies to look 
at if similar payments went out on the same day.
    So our analytics programs have grown. We've, as I 
mentioned, we've got--we've done 21--22 analytics projects for 
nine agencies just this year.
    Mr. Palmer. Ms. Park, Social Security Administration and 
HHS use third-party payroll data to verify payments and the VA 
doesn't. Why doesn't the VA use third-party payroll data?
    Ms. Park. So we use various methods to verify pay in the 
program. Specifically, I can't talk to exactly what those are. 
I would need our senior accountable official, so I'll have to 
take that for the record. We are looking at opportunities to 
partner with industry to get that information and we'll be 
working on that in the coming year.
    Mr. Palmer. Are you--do you know if the VA is considering 
using additional data sources?
    Ms. Park. Yes, we are, sir. I mean, just this year, we 
awarded a new contract to support us in our IPERA efforts, and 
we're hoping that the contractor will bring different methods 
for us to use, and we're also exploring other areas.
    Mr. Palmer. I'll switch over to OMB because I don't want 
Mr. Mader to feel like he's being left out.
    So Mr. Meadows has already asked him these questions, well, 
then you haven't been left out.
    I want to go back to Ms. Conley and HHS. And the Center for 
Medicare & Medicaid Services failed to meet reduction targets 
for Medicare Advantage, Medicaid, and the Children's Health 
Insurance Program. Why weren't you able to meet those targets?
    Ms. Conley. Thank you very much for your question. I think 
maybe I'll start with the Medicaid program because this is an 
important large, broad program. In 2014, we began implementing 
new requirements of the Affordable Care Act as well as HIPAA, 
to require States to do three basic things: One, to screen all 
new enrollees into the program; and two, to reenroll all of 
their providers; and the third thing is to have all electronic 
claims include a national provider identification.
    So these three efforts, which were very substantive and 
challenging for agencies, has taken--excuse me, for States--it 
has taken the States--they're adopting these new requirements 
at different rates. This is an example--each of these three new 
requirements is an example of where we're actually 
strengthening the underlying integrity of the program by 
knowing who we're doing business with with these--with the new 
screening and the enrollment process, as well as being able to 
identify and track payments. So we can reduce the likelihood of 
fraud by knowing who we're doing business with and having 
screened them, as well as reduce improper payments by 
encouraging the States, assisting them, if you will, in 
complying with these three requirements.
    We measure Medicaid over a 3-year period, and so 2014 was 
the first year that we measured against the first batch of 
States in compliance with this requirement for 2014, second 
batch in 2015, and the third and final batch would be captured 
in our 2016 error rate measurement. So that is why you see that 
error rate going up from 2014 to 2015 to 2016. We expect States 
to be in compliance.
    We're doing a lot of outreach. We're sharing with them 
information about the enrollment process that we have 
encountered at--or executed at CMS for fee-for-service. We're 
doing a variety of outreach efforts and communication to assist 
the States, and we expect those rates to go down.
    Mr. Palmer. According to the inspector general, Medicare 
Advantage did not report any recovery amount audits in 2015. 
How does CMS justify not conducting recovery audits, given the 
estimated improper payments report?
    Ms. Conley. So with regard to Medicare part C, we have 
taken action to begin the procurement process for recovery 
audit contractors. That program, the Recovery Act, or the RAC, 
rather----
    Mr. Palmer. Wait a minute. I want to make sure that I 
understand this. You have begun the process to----
    Ms. Conley. To procure RACs for the part C program.
    Mr. Palmer. But why have you just now started the process 
when we've been losing billions of dollars?
    Ms. Conley. So we started a while back. So we did a request 
for information from the private sector to share with us ideas 
and options for how we could actually carry out the recovery 
audit contracts in a meaningful way. Information was provided 
and we are now in the process of--we've done a Request for 
Proposal and we're going through the procurement process at 
this point in time.
    Mr. Palmer. Well, see, here's the thing that I don't 
understand. Private companies who have to make sure they don't 
incur losses in order to stay in business require 100 percent 
claims to be audited for accuracy in billing, I think. They may 
be under legal requirements for that as well, and it just--I 
don't quite understand why CMS doesn't do a better job 
auditing, why they audit such a small percentage.
    Ms. Conley. So one thing that I should mention is that with 
regard to Medicare part C, we conduct what are called RADV 
audits, risk adjustment data validation audits, of the various 
plans; about 30 plans destined to go up to about 100 plans of 
the total 600 eventually. And what happens is we conduct the 
audit at that contract level so that the results of that 
testing can be extrapolated out to that particular contractor.
    These RADV audits have been executed for a period of time 
and we're beginning to see the impact of that audit process, 
not just on the entities subjected to that audit process 
already, but also on some of the plans that have yet to be 
audited.
    In addition to that, we have implemented a new regulation 
that requires these plans to submit back to CMS any 
overpayments that they identify in the process. The combined 
effect of those two activities has resulted in $650 million 
being returned to CMS as a result of this collective work.
    Mr. Palmer. Well, obviously, $650 million is a lot, but it 
pales in comparison to the $125 billion that's been lost over 
the last 3 years. And the thing that concerns me about this, 
and again, the enormity of the improper payments over the last 
3 years, is that the Medicare trustees estimate that Medicare, 
the program will be bankrupt in 12 years. And I mean, this is 
serious stuff.
    They've called votes. I'm going to transition because I 
have got to--I know Mr. Meadows asked the question, but just 
for my own purposes, I'd like to know why OMB hasn't produced 
an annual report to Congress, including these subjects.
    Mr. Mader. Congressman, as I explained to Chairman Meadows, 
my predecessor in 2010 made a decision that they would use this 
paymentaccuracy.gov approach to satisfy, not only an executive 
order, but also the legislative requirement from the annual 
report to the Congress. I arrived in the summer of 2014. You 
know, we're in, obviously, the fourth year of generating it, 
and I assumed that this was meeting the statutory requirements, 
until we had a call this summer from the staff saying, you 
know, by the way, you're not. You're missing this and you're 
missing that.
    We had a good conversation with the staff at the time. 
Immediately then, I took the action to actually start doing an 
analysis of what was missing and what could we do to relaunch 
the site going forward so that it was in compliance and totally 
accurate. We have a project plan underway that would allow us 
to relaunch the site in the January through March timeframe.
    The exchange that I had with Chairman Meadows was, well, 
maybe we should talk more about, you know, do we want a, you 
know, a paper document report or do we want a, you know, a Web 
site that would meet all of the requirements?
    So my commitment to the committee is to get together with 
the staff and sort of work through what, you know, what are the 
interests, what are the requirements, and you know, come to a 
decision on what makes sense. I mean, we're going to do the--
we're going to relaunch the Web site regardless. If the 
committee wants a written report, we can do a written report.
    Mr. Palmer. Well, I'll discuss that with Chairman Meadows, 
but I do appreciate the fact that there's been some initiative 
taken to address this.
    I tell you what we're going to do. I'm going to recess the 
hearing, so you need to hang around, and I'll get with Chairman 
Meadows on the floor to determine if we need to come back. I 
don't want to adjourn the hearing without talking to the 
chairman. And----
    He's okay with it?
    Apparently, someone has talked to the chairman. This is 
like at home. I'm the last one to know. So I'm very comfortable 
in the situation.
    But anyway, if there's no further business, our hearing is 
adjourned.
    [Whereupon, at 4:31 p.m., the subcommittee was adjourned.]

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