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Published: 2001

Total Pages: 67

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Improper payments are a widespread and significant problem receiving increased attention not only in the federal government but also among states, foreign governments, and private sector companies. Improper payments include inadvertent errors, such as duplicate payments and miscalculations; payments for unsupported or inadequately supported claims; payments for services not rendered; payments to ineligible beneficiaries; and payments resulting from outright fraud and abuse by program participants and/or federal employees. In the federal government, for example, they occur in a variety of programs and activities, including those related to contractors and contract management; health care programs, such as Medicare and Medicaid; financial assistance benefits, such as Food Stamps and housing subsidies; and tax refunds. While in the private sector improper payments most often present an internal problem that threatens profitability, in the public sector they can translate into serving fewer recipients or represent wasteful spending or a higher relative tax burden that prompts questions and criticism from the Congress, the media, and the taxpayers. For federal programs with legislative or regulatory eligibility criteria, improper payments indicate that agencies are spending more than necessary to meet program goals. Conversely, for programs with fixed funds, any waste of federal funds translates into serving fewer recipients or accomplishing less programmatically than could be expected.