Safeguarding Federal Funds
Reducing Improper Payments in Federal Programs
The Billion Dollar Problem: Unmasking Improper Payments
Improper payments cost the federal government hundreds of billions of dollars each year. Such errors span major programs across healthcare, civilian, and defense, undermining public trust and draining resources that could otherwise further the mission of federal agencies. In fiscal year (FY) 2024, 16 federal agencies reported a total estimate of about $1621 billion in improper payments across 68 programs – of these, approximately 84% were a result of overpayments. process and documentation gaps or eligibility mistakes – the end result is the same: critical funds diverted away from their intended purpose.
1 U.S General Accountability Office (GAO), Improper Payments: Information On Agencies' Fiscal Year 2024 Estimates, GAO-25-107753, March 11, 2025
Digging Deeper: Why Do Improper Payments Occur?
Improper payments stem from numerous underlying causes, including:
- Foundational Challenges: insufficient documentation, eligibility errors, and administrative and processing mistakes.
- Systematic Challenges: system weaknesses, unidentified risks, inadequate internal controls, diverted focus from program mission, and non-compliance with financial regulations and program requirements.
- Navigating Compliance and Integrity Challenges: These issues not only result in improper payments but reflect broader payment integrity, transparency, accountability, and compliance challenges. They can also result in material weaknesses in financial and other types of agency reporting, undermining overall program effectiveness.
The Universal Fix?
The urgency for federal agency leaders to address these issues is greater than ever due to new memoranda directing leaders to focus on reimagining oversight, audits, and process improvements through a risk-based lens. Ensuring that every dollar is spent correctly and benefits the right recipient is paramount. When agencies focus on meeting the program mission, performing comprehensive risk identification, implementing sound internal controls and monitoring mechanisms, and thoughtfully remediating findings based on root cause analysis they reduce improper payments in their programs, thereby safeguarding the public’s money and trust.
Steps to achieve sustainable program integrity
Reducing improper payments isn’t about fixing one-off issues, it’s about embedding integrity into the DNA of federal programs. Having the right framework in place provides a risk based, structured, and technology-enabled model that supports agencies in achieving this goal. An effective program integrity framework consists of five interconnected components that span the life cycle of a program:
1
Governance –
- Laying the Groundwork: Effective governance lays a solid foundation by structuring organizational frameworks, applying regulatory guidance, and proactively managing program risks.
- Establishing Strong Governance: It involves aligning governance structures, forming cross-functional councils, and defining key performance indicators to guide risk management and policy review.
- Reaping Reward: These governance efforts drive accountability, enhance efficiency, and ensure early identification of risks, safeguarding against improper payments.
2
Eligibility –
- Laying the Groundwork: The eligibility component helps to craft and document meticulous procedures to ensure participant qualifications align with relevant laws, regulations, and policies.
- Establishing Strong Eligibility: By leveraging Artificial Intelligence (AI), generative AI, data analytics, and machine learning (ML), agencies can streamline workflows to prevent improper payments through enhanced pre-enrollment checks.
- Reaping Reward: Advanced technology enables real-time identification of eligibility issues, closes documentation gaps, reduces errors, and improves the quality of participant data from the start.
3
Operations –
- Laying the Groundwork: The operations component encompass essential program functions like payment distribution and charge collection, ensuring the effective execution of agency missions across various activities.
- Establishing Strong Operations: Refining payment logic, integrating validation rules, and standardizing procedures with data analytics helps prevent and swiftly address errors in payments and processes prior to disbursement of government resources.
- Reaping Reward: These proactive measures ensure precise, timely disbursements, implementing preventative controls to mitigate improper payments and promptly correct operational discrepancies.
4
Oversight and Monitoring –
- Laying the Groundwork: Oversight and monitoring are crucial for reviewing and reporting program function efficiency, enhancing accountability, transparency, and continuous improvement aligned with agency missions.
- Establishing Strong Oversight & Monitoring: Implementing technology-driven analyses and automation like AI-driven Optical Character Recognition (OCR), ML, and Natural Language Processing (NLP) enables comprehensive auditing, data quality reviews, and predictive analyses to inform risk management and KPI refinement.
- Reaping Reward: Implementing technology-driven analyses and automation like AI-driven OCR, ML, and NLP enables comprehensive auditing, data quality reviews, and predictive analyses to inform risk management and KPI refinement.
5
Laying the groundwork and reaping the benefit for strong and continuous program improvement –
This component reviews prior efforts and uses root cause analysis to identify high-impact improvements, enhancing governance, eligibility, operations, and oversight to reduce improper payments. By conducting after-action reviews, leveraging audit findings, and embedding lessons learned into policies, it creates feedback loops that fortify program integrity and sustain compliance over time.
Empowering Agency Programs: Tailored Strategies for Enhanced Program Performance
The Program Integrity components outlined above support continual refinement of the holistic program to increase effectiveness, reduce stakeholder burden, and protect taxpayer dollars. Whether a program is newly launched, undergoing transformation, or in need of performance improvement, a sound program integrity approach can be tailored to fit the maturity and challenges of the agency’s mission. Leveraging technology-driven solutions integrated with a PI framework can empower agencies to:
Establish coordinated governance structures that align with strategic goals and flow through all levels of program operations;
Apply leading data and analytics tools to detect, predict, and prevent improper payments and operational inefficiencies for oversight and monitoring of program efficiencies;
Integrate intelligent automation and process robotics to handle routine tasks within program operations, freeing staff to focus on complex, high-impact work;
Strengthen cybersecurity and safeguard sensitive beneficiary and payment data for oversight;
Facilitate cross-functional collaboration among stakeholders to enhance operational accountability and improve program transparency; and
Deliver targeted training and workforce enablement to build program integrity skills across the organization and program improvement
By implementing a Program Integrity Framework into agency operations, federal leaders can achieve measurable outcomes: enhanced oversight, fewer payment errors, and improved program resilience.
No matter the program or agency size, the result is the same—a more effective, efficient, and accountable government program.
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