	Sustained Attention Is Critical for Addressing Fragmentation, Overlap, and Duplication and Achieving Other Financial Benefits

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. Executive Branch and Congress Continued to Make Progress in Addressing Previously Identified Issues

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. In addition, progress has been made in addressing the proliferation of  certain programs. 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. Table 4 highlights these and other opportunities that could result in tens  of billions of dollars in cost savings or enhanced revenue. Addressing Improper Payments Could Help Achieve Cost Savings

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. 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. Improper Payments Remain a Government- Wide Issue

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. Additional Efforts Are Needed to Reduce Medicare, Medicaid, and Earned Income Tax Credit Improper Payments

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. Improving use of automated edits. 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. 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.
Why GAO Did This Study

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.

What GAO Found

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.

What GAO Recommends

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.