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Federal agencies paid $175 billion in error during fiscal 2019: government report

Federal government payments made in error due to fraud or other factors continue to rise

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Hundred dollar bills
Hundred dollar bills
(Xinhua/Liu Jie via Getty Images)
Updated: April 16, 2020 - 3:24pm

The Facts Inside Our Reporter’s Notebook

Federal agencies paid out a total $175 billion in error during fiscal 2019, roughly $24 billion more than in the previous fiscal year, according to a recently released Government Accountability Office report.

The GAO refers to the payments as “improper” and said they occur when the federal government “overpays, underpays, or makes payments to ineligible recipients.” It also includes payments made for “an ineligible good or service.”

The report found that the majority of the improper payments occurred in the areas of Medicaid, Medicare and the Earned Income Tax Credit. The payments occur because of fraud and other reasons, which the GAO describes in its full report.

“Increasingly, the federal government is making payments it shouldn’t,” the GAO reported on its WatchBlog.

According to the Office of Management and Budget, the 2019 improper payments were reported in four categories:  

  • Overpayments, about $79.1 billion, equaling roughly 45.2 percent;
  • Underpayments, about $12.9 billion, equaling roughly 7.4 percent;
  • Unknown, about $74.1 billion, equaling roughly 42.4 percent; 
  • Technically improper due to statute or regulation, about $8.7 billion, equaling roughly 5 percent.

A payment is classified as “unknown” when a federal agency is "unable to discern whether the payment was proper or improper as a result of insufficient or lack of documentation.”

The payment category listed as “technically improper due to statute or regulation” represents “a payment made to the right recipient for the right amount but the payment process failed to follow applicable regulation and statute.”

To put the total number of improper payments in perspective, not including underpayments, $162 billon is larger than the combined annual budgets of the Education Department ($62 billion), Homeland Security Department ($51 billion), Energy Department ($32 billion), Labor Department ($11 billion) and the Environmental Protection Agency ($6 billion) – based on the latest figures.

Improper payments in FY2018 were lower at $151 billion. In FY2017, the figure was $141 billion.