Under IPIA, an improper payment is defined as a payment that should not have been made or that was made in an incorrect amount, including both overpayments and underpayments. This definition includes payments made to ineligible recipients, duplicate payments, payments for a good or service not received, and payments that do not account for credit for applicable discounts. The increase in improper payments between FY2007 and FY2010 can be partially attributed to the inclusion of new programs. In addition, government expenditures for public assistance increased between FY2007 and FY2010 as the economy weakened, which further increased the amount of improper payments issued under many risk-susceptible programs. With this in mind, in November 2009, President Obama signed Executive Order 13520, which required the Director of the Office of Management and Budget (OMB) to work with agencies to identify "high priority" programs (those which account for the "highest dollar value or majority of improper payments" across the government), establish annual targets for reducing improper payments under high priority programs, and submit a report to the agency's inspector general that detailed how the agency planned to meet those targets. In response to E.O. Under the revised circular, a program is deemed high priority if it has
reported more than $750 million in improper payments in the most recent fiscal year; not reported an improper payments amount for the most recent fiscal year, but has reported more than $750 million in improper payments in a previous fiscal year; or not yet reported on improper payments for the program as a whole, but has determined that the total amount of improper payments for program components that have been measured exceeds $750 million. In FY2013, those four programs accounted for $77 billion of the government's total improper payments of $106 billion. As Table 3 shows, high priority programs accounted for 85% to 96% of the improper payments reported by agencies annually from FY2004 through FY2013. While some high priority programs have seen a steady decline in their improper payments error rates, others have shown little or no improvement—and some have seen their error rates increase over time. The data also indicate, however, that several high priority programs have shown little or no improvement. In sum, while the government-wide error rate has fallen each of the past four fiscal years, there has been little progress made reducing the error rates for a number of high priority programs.
The Improper Payments Information Act (IPIA) of 2002 defines improper payments as payments that should not have been made or that were made in an incorrect amount, including both overpayments and underpayments. This definition includes payments made to ineligible recipients, duplicate payments, payments for a good or service not received, and payments that do not account for credit for applicable discounts. Since FY2004, federal agencies have been required to report on the amount of improper payments they issue each year and take steps to address the root causes of the problem. The data show a significant increase in improper payments from FY2007 ($42 billion) to FY2010 ($121 billion), followed by a slight decrease through FY2013 ($106 billion). The increase in improper payment amounts may be partially attributed to an increase in the number of programs reporting between FY2007 and FY2010, as well as increased federal expenditures for many programs during that same timeframe. The data also show that a small subset of programs has accounted for 85% to 96% of the government's total improper payments each year. With that in mind, President Obama signed E.O. 13520 in 2009, which requires agencies to take additional measures with regard to these "high priority" programs. Notably, the executive order requires agencies to identify high priority programs, develop detailed plans for reducing related improper payments, and establish annual goals against which progress could be measured. Agencies have identified 13 high priority programs and all but one of them have been reporting data for several years. The data on high priority programs present mixed results. Four high priority programs showed sustained improvement over time, as indicated by steadily decreasing error rates, while four others reported little or no improvement in their error rates. Of the four remaining high priority programs that have reported data, error rates increased for two and slightly decreased for two others. Without further progress in reducing the error rates among high priority programs the government's total amount of improper payments may continue to exceed $100 billion per fiscal year, as it has since FY2009.