	Improper Payments Elimination and Recovery Act of 2010

		Background

In an effort to reduce and ultimately eliminate billions of dollars in improper payments made by federal agencies each fiscal year, Congress passed the Improper Payments Information Act (IPIA; P.L. 107-300 ; 116 Stat. 2350) in 2002. IPIA established an initial framework for identifying, measuring, preventing, and reporting on improper payments at each agency. Separately, Congress also passed legislation, the Recovery Audit Act of 2002 ( P.L. 107-107 ; Section 831; 115 Stat. 1186), which required agencies that awarded more than $500 million annually in contracts to implement plans to recover overpayments to contractors. In response, Congress passed new legislation, the Improper Payments Elimination and Recovery Act of 2010 (IPERA; P.L. 111-204 ; 124 Stat. 2224), which amended and consolidated the requirements of both IPIA and the Recovery Audit Act. As discussed below, IPERA retained the core provisions of the IPIA while requiring improvements in agency improper payment estimation methodologies and improper payment reduction plans. It also significantly expanded the scope and reporting requirements of recovery audit programs. Improper Payments

IPERA defines an improper payment as a payment that should not have been made or that was made in an incorrect amount, including both overpayments and underpayments. First, the legislation requires agency heads to provide a report on improper payment recovery actions, which is to include a statistically valid estimate of improper payments made by each program or activity, along with the following:
a discussion of the methods used to recover overpayments; the amounts recovered, outstanding, and determined not to be collectable; a written justification explaining any uncollected amounts; an aging schedule of outstanding amounts; a summary of the disposition of recovered amounts; a discussion of conditions giving rise to improper payments and how these are being resolved; and if an agency determined that a recovery audit was not cost-effective, then a justification as to why. Improper Payments Elimination and Recovery Audit Improvement Act of 2012

In an attempt to expand the scope of data used to verify that payments are being made to eligible recipients and for the correct amount, Congress passed the Improper Payments Elimination and Recovery Audit Improvement Act of 2012 (IPERIA; P.L. 112-248 ). High-Priority Programs

A-123 establishes criteria for high-priority programs. Agencies are required to establish annual payment recapture targets for their programs, which OMB must approve. In some cases, error rates for those programs have actually increased over time. Other programs have reduced their error rates, but not substantially. Incomplete Scope

The full scope of improper payments has not been determined because agencies have not yet developed estimates for all of their risk-susceptible programs or are not consistently reporting improper payment rates and amounts. Some agencies have not yet implemented recovery audit programs as required. Fraud Reduction and Data Analytics Act

The Fraud Reduction and Data Analytics Act of 2015 (FRDAA, S. 2133 ) passed the Senate on April 12, 2016. Companion legislation ( H.R. Agencies are required to include in their annual financial reports a discussion of their progress in implementing fraud risk guidance and controls, identifying risks and vulnerabilities to fraud, and establishing strategies and procedures to combat fraud. The FRDAA also requires OMB to establish a working group to develop strategies to improve the sharing of (1) best practices for detecting, preventing and responding to fraud; and (2) data analytics techniques. The working group is to submit a plan to Congress for establishing an interagency library of data analytics and data sets, which could be used by federal agencies and IGs to facilitate the detection, prevention, and recovery of fraud, including improper payments.
As Congress searches for ways to generate savings, reduce the deficit, and fund federal programs, it has held hearings and passed legislation to prevent and recover improper payments. Improper payments—which exceeded $137 billion in FY2015—are payments made in an incorrect amount, payments that should not have been made at all, or payments made to an ineligible recipient or for an ineligible purpose. The total amount of improper payments may be even higher than reported because several agencies have yet to determine improper payment amounts for all of their programs.
In 2002, Congress passed the Improper Payments Information Act (IPIA; P.L. 107-300; 116 Stat. 2350), which established an initial framework for identifying, measuring, preventing, and reporting on improper payments at each agency. That same year, Congress also passed legislation, the Recovery Audit Act (P.L. 107-107; Section 831; 115 Stat. 1186), which required agencies that awarded more than $500 million annually in contracts to establish programs to recover overpayments to contractors.
Congress passed new legislation, the Improper Payments Elimination and Recovery Act of 2010 (IPERA, P.L. 111-204; 124 Stat. 2224), which replaced and consolidated the requirements of both IPIA and the Recovery Audit Act. IPERA retained the core provisions of the IPIA while requiring improvements in agency improper payment estimation methodologies and improper payment reduction plans. It also significantly expanded the scope and reporting requirements of recovery audit programs.
The Improper Payments Elimination and Recovery Improvement Act of 2012 (IPERIA; P.L. 112-248; 126 Stat. 2390) requires agencies to improve the quality of oversight for high-dollar and high-risk programs, and mandates that agencies share data regarding recipient eligibility and payment amounts. In addition, IPERIA requires the Office of Management and Budget (OMB) to examine the rates and amounts of improper payments that agencies have recovered and establish targets for increasing those amounts.
Implementation of improper payments legislation has been uneven across the government. While error rates have decreased for some programs, they have increased for others—including some high-priority programs with billions in annual outlays. Some agencies have not established error rates for all of their risk-susceptible programs, or have not consistently reported required improper payments reduction goals. Data sharing among agencies—a key tool for preventing improper payments—has been limited, and some agencies have not implemented and reported on their recovery audit programs, despite being required by law to do so.
The Fraud Reduction and Data Analytics Act of 2015 (H.R. 4180/S. 2133) would require the OMB to establish financial and administrative controls related to fraud and improper payments. Agencies would be required to include in their annual financial reports a discussion of their progress in implementing fraud risk guidance. OMB would also be required to establish a working group to improve the sharing of (1) best practices for mitigating fraud, and (2) effective data analytics techniques. The working group would also submit a plan to Congress for establishing an interagency library of data analytics and data sets, which would be used by federal agencies and IGs to facilitate the detection, prevention, and recovery of fraud, including improper payments.