The White House said that the Federal government’s improper payment rate for fiscal year (FY) 2022 dropped by 2.1 percentage points – from 7.2 percent in FY2021 to 5.1 percent in FY2022 – marking a 26 percent reduction in the improper payment rate on a year-over-year basis.

In a Nov. 23 blog post from the Office of Management and Budget (OMB), the agency explained that declining improper payment rate came even as several new programs – including pandemic relief programs – reported data for the first time.

“This decrease is an important step in the right direction and reflects ongoing work OMB has been leading with Federal agencies to improve payment integrity, including to implement the Payment Integrity Information Act of 2019,” OMB wrote. “But our work isn’t finished – and the data makes clear that Federal agencies have more to do to drive down improper payments in both newer and long-standing programs.”

For example, the White House noted that while the Federal-State Unemployment Insurance (UI) program saw a $59 billion decrease in improper payments, it also experienced a small increase in the improper payment rate. OMB said more support and an updated funding formula are needed to support state UI administration, which continues to face the compounding effects of the pandemic.

Additionally, OMB said the pandemic revealed another key underlying issue: continued underinvestment in IT systems.

“Many states’ outdated IT systems simply were not capable of handling the influx of new claims that surged to 20 times the normal volume or of quickly implementing new program requirements – thus making state UI programs more susceptible to improper payments,” OMB wrote.

The agency said the Biden administration has taken steps to address these problems, including working closely with state UI agencies on reforms and providing necessary funding to drive down the improper payment rate.

Several Federal agencies have also banded together to release the Identity Verification Controls Simulator tool, which aims to illustrate concepts for improving identity verification and reducing improper payments.

OMB made clear that “most improper payments are not fraudulent and not all represent a monetary loss to taxpayers.” For instance, an improper payment can include both overpayments and underpayments.

If an agency can’t determine if a payment was made properly while conducting its improper payment review, OMB said the entire payment is marked as “unknown,” and also counts toward the improper payment rate – even if it turns out only a portion of it was made improperly.

“We are seeing progress in addressing improper payments, but more work remains,” OMB concluded. “As the president has said, ‘We have to prove democracy still works, that our government works and can deliver for our people’ – and that means continuing to make sure that we safeguard taxpayer dollars in a manner deserving of public trust.”

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Grace Dille
Grace Dille
Grace Dille is a MeriTalk Senior Technology Reporter covering the intersection of government and technology.