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Audit (A-17-13-52000)

03-15-2013
U.S. Department of Health and Human Services Met Many Requirements of the Improper Payments Information Act of 2002 but Was Not Fully Compliant

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Summary

OIG is required to review and report on the Department's annual Agency Financial Report (AFR) and Other Accompanying Information to determine compliance with the Improper Payments Information Act of 2002 (IPIA) as amended by the Improper Payments Elimination and Recovery Act of 2010 (IPERA). (The "IPIA" will refer to IPIA as amended by the IPERA.) OIG must review the AFR of the most recent fiscal year (FY) to determine whether the agency conducted a program-specific risk assessment to identify each program or activity that is susceptible to significant improper payments and reported specific information on those programs in its AFR, including whether the rate of improper payments was less than 10 percent. OIG must also evaluate the accuracy and completeness of agency reporting and evaluate agency performance in reducing and recapturing improper payments.

Although the Department met many of the IPIA requirements, it did not fully comply with the IPIA and Office of Management and Budget (OMB) guidance. The Department published an AFR for 2012 and posted that report and accompanying material required by OMB on its Web site. It also conducted a program-specific risk assessment of 33 programs that were not deemed high risk by OMB to identify those programs or activities that might have been susceptible to significant improper payments.

The Department reported improper payment information for nine programs that were deemed to be high risk by OMB. However, it did not report an improper payment estimate for one of the nine programs, the Temporary Assistance for Needy Families program (TANF). The Department published corrective action plans for seven of nine programs. The Children's Health Insurance Program (CHIP) did not publish corrective action plans as required, and this requirement did not apply to TANF because an estimate was not provided. The Department reported that four of nine programs met their improper payment rate reduction targets. However, three of nine (i.e., Medicare Fee-for-Service, Medicare Advantage, and Foster Care) did not meet their improper payment rate reduction targets for FY 2012; this requirement did not apply for the remaining two programs because a target had not been established for either program. The Department reported that seven of nine programs had an improper payment rate below 10 percent. Medicare Advantage reported an improper payment rate of 11.4 percent for FY 2012, and this requirement did not apply for TANF because it did not provide a prior-year improper payment estimate. We found that the Department reported information on its efforts to recapture improper payments in accordance with OMB guidance.

We also evaluated the accuracy and completeness of the Department's reporting and did not identify any inaccuracies or gaps in the information reported for three programs (i.e., Medicaid, Head Start, and Foster Care). For four programs (i.e., Child Care Development Funds, Medicare Fee-for-Service, Medicare Advantage, and Medicare Prescription Drugs), we identified inaccuracies, and for two programs (i.e., CHIP and TANF), we identified incomplete information.

We also identified that the Department has achieved some success in reducing improper payment rates. The Department reported reductions in rates for five programs for which it reported improper payment rates. However, the Department reported increases in the Medicare Advantage and Foster Care programs' improper payment rates.

We recommend that the Department improve its compliance with the IPIA by assessing the need for additional actions to meet improper payment rate reduction targets, developing and reporting improper payment rate reduction targets and corrective action plans for CHIP, ensuring that amounts used in the computations for reporting overpayments recaptured are accurate and complete, and ensuring data are retained in accordance with program requirements.

In its comments on the draft report, the Department neither agreed nor disagreed with our four recommendations. Instead, the Department described actions it has implemented or plans to implement related to the recommendations and expressed concerns primarily about the recommendation for CHIP. We acknowledge that the Department has taken or plans to take actions to address our recommendations. With regard to our recommendations for CHIP, taking actions to comply with the IPIA will focus the Department's efforts to minimize improper payments.

Copies can also be obtained by contacting the Office of Public Affairs at Public.Affairs@oig.hhs.gov.

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