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Payment Integrity

OPM is committed to advancing a transparent, accountable, and collaborative financial management environment to fulfill its federal requirements and provide stakeholders with accessible and actionable financial information. An essential part of this commitment is the continuous improvement of payment accuracy in OPM’s programs. OPM continues to implement solutions to prevent, detect, and reduce improper payments while reducing its stakeholders’ unnecessary administrative burden.

The FY 2023 Payment Integrity Report includes a discussion of the following information:

  • Program Descriptions (Section 1.0)
  • Accountability (Section 2.0)
  • Audit Recovery (Section 3.0)

For detailed information on improper payments in this and previous fiscal years, visit the Payment Accuracy Report. This site includes frequently asked questions about improper payments, annual improper payment datasets, and program scorecards.

1.0 Program Descriptions

In FY 2023, OPM reports improper payments for two major programs: Federal Retirement Services and the Federal Employees Health Benefits (FEHB) Program.

Retirement Program

OPM paid $95.30 billion in defined benefits to retirees, survivors, representative payees, and families during FY 2023 under the Civil Service Retirement System (CSRS) and Federal Employees Retirement System (FERS). Eligible retirees and survivors generally receive monthly benefits, but, in some cases, an applicant can also receive a lump-sum payment. Eligible employees who leave Federal service before qualifying for a CSRS or FERS retirement may request that their contributions be refunded in a lump-sum amount.

FEHB Program

The FEHB Program became effective in 1960. It is the world’s largest employer-sponsored group health insurance program, covering approximately 8.2 million Federal employees, annuitants, family members, and other eligible individuals.

Since its inception, the FEHB Program has provided a wide choice of health plans offering quality, affordable, and comprehensive health benefits. The Program offers national and local plan choices, represents excellent value, receives high satisfaction ratings, and is a vital part of the federal government’s benefits package.

Healthcare and Insurance (HI) administers the FEHB Program through contracts with participating carriers that provide health benefit plans to FEHB members. Two types of carriers participate in the Program: experience-rated carriers (ERCs) and community-rated carriers (CRCs). Experience-rated carriers maintain separate accounting for their FEHB Program contracts and receive reimbursement of their actual, reasonable, allowable, and allocable administrative and claims expenses. Alternatively, community-rated carriers receive a premium based on the average revenue needed to provide benefits to their members. The premium includes administrative expenses.

2.0 Accountability

Continual strengthening of program integrity throughout the agency is a top priority, extending to all OPM’s senior executives and program officials. As evidence of this focus, beginning with senior leadership and cascading down, performance plans contain strategic goals to enhance program integrity, protect taxpayer resources, and reduce improper payments.

OPM’s Chief Financial Officer (CFO) is the Senior Accountable Official for the Payment Integrity Program. The OCFO chairs an Improper Payment Working Group that includes program offices that regularly address improper payments.

Retirement Program

Retirement Services (RS) provides Federal employees, retirees, and their families with benefits that offer choice, value, and quality to be a competitive employer. Eligible retirees and survivors generally receive recurring monthly benefits. The status of an annuitant may periodically change and can result in a change to the benefits due. These changes may be due to a life event such as a death, marriage, termination of a marriage, or earnings limitations.

In FY 2023, RS properly paid 99.62 percent of annuity payments and improperly paid 0.38 percent. RS is committed to reducing improper payments by utilizing effective internal controls, corrective actions, and extensive internal recovery efforts. However, system limitations are preventing OPM from expanding root causes category reporting per OMB Circular A-136, Financial Reporting Requirements. Specifically, the current IT system supporting RS does not have the granularity to align with the OMB root cause categories. RS is aware of the principle causes for improper payments and they are identified below.

RS remains committed to ensuring the rate of improper payments remains at 0.38 percent or less. In 2019, the Fraud Branch was established under the Retirement Services Program to manage the integrity of the annuity roll. The Fraud Branch responds to inquiries of alleged fraud and data integrity breaches to safeguard the annuity rolls. The Branch answers fraud inquiries involving all phases of retirement processing including the proper routing of payments, the payment of life insurance, the provision of health benefits, the representative payee process, and medical review. The branch’s data integrity team monitors error reports and extracts data on an annuity to confirm and correct information to maintain accuracy.

Delayed Reporting - The status of an annuitant periodically changes and can result in a change to the benefits due. These changes may be a result of death or marriage. The status can also change when the annuitant is restored to earning capacity, reemployed, or for other reasons. OPM relies on annuitants and other sources (such as the Social Security Administration’s Death Master File) to learn of some of these status changes. Delayed reporting of the status changes, or sometimes no reporting by the annuitants and other sources, can result in an improper payment.

Actions Taken - OPM conducted several matches and annual surveys. Anomalies identified in these matches and surveys are researched by OPM and, if needed, referred to the OIG.

Prohibited Dual Benefit Payments - Unauthorized dual benefits payments are those benefits for which an employee may qualify for one or the other but not both at once or in full. An example of the potential for unauthorized dual benefit payments occurs when individuals apply for FERS disability while applying for SSA disability benefits. The law prohibits payment of full, unreduced FERS disability annuity benefits and SSA disability benefits for the same period. Since FERS disability annuity benefits are sometimes approved before the SSA determines an award, FERS annuitants can receive full, unreduced monthly annuities before the SSA approves disability benefits. As a result, the annuitant will often owe OPM the cumulative amount of the SSA benefit that should have been withheld from the FERS annuity.

Actions Taken - FERS annuitants are notified of the obligation to repay the debt to the government. OPM recovers overpayments through installment deductions from recurring annuities.

Administrative or Process Errors - OPM’s annuity calculations have automated and manual components. The manual components are subject to human error. Errors can include incorrect effective dates, salary rates, and tours of duty which all impact annuity calculations. These errors may occur because OPM incorrectly entered the information or because the annuitant or separating agency provided incorrect information.

Actions Taken - Regular audits are performed to assess the accuracy of Agency retirement packages. Each month, the audit result as well as the most common errors identified are reported to the Agency benefits officers. In addition, internal audits are conducted monthly to determine the accuracy of newly adjudicated retiree and survivor claims under both CSRS and FERS. These audits are used to identify any training or systemic deficiencies.

FEHB Program

Healthcare and Insurance Contracting Officers (CO) exercise broad authority in their day-to-day oversight of FEHB Carriers through benefit and rate negotiations, contract compliance, reviewing large provider contracts and sub-contracts, defense of lawsuits, adjudication of disputed claims, and more. Recovering and preventing improper payments by carriers are among the key factors that Contracting Officers consider when assessing Carrier performance. Accountability is inherently incorporated into Contracting Officers’ routine activities, such as the use of resolution timelines to work plans, partnering with both the OIG and carriers to improve fraud and abuse reporting, amending FEHB contracts, longer-term project planning, audit resolution activities, improper payment recovery goals, and other internal control-strengthening activities. Contracting Officers’ and other involved management’s performance standards are results-based, reflect audit resolution priorities, and are reviewed annually.

Healthcare and Insurance’s oversight of carriers includes the FEHB Plan Performance Assessment (PPA), which uses a discrete set of quantifiable measures to examine key aspects of FEHB Carrier’s contract performance along with a contract oversight component. The PPA helps ensure payment integrity by creating a risk that carriers will lose money for performance in this area. The PPA determines health-plan profit or performance adjustment factors, making it a strong incentive to affect carrier behavior. Developed by OPM, PPA ensures a consistent assessment system, objective performance standards, and more transparency for enrollees.

During the 2023 contract year scoring cycle, on average, the FEHB Program continued to perform above the national commercial mid-point (50th percentile) in the following high-priority metrics: controlling high blood pressure, diabetes care, prenatal care, and imaging for low back pain.

The Antideficiency Act (ADA), which is codified in 31 U.S.C. §§1341(a)(1), 1342, and 1517(a), stipulates that Federal agencies may not obligate or expend funds in excess of the amount available in an appropriation or fund in advance; accept voluntary services on behalf of the Federal Government or employ personal services in excess of that authorized by law, except as it may be necessary in emergencies involving the safety of human life or the protection of property; or obligate, authorize, or expend funds that exceed an apportionment or amount permitted by a regulation prescribed for the administrative control of an appropriation. OPM reported a violation of the ADA, as required by 31 U.S.C. 1517(b). A violation of 31 U.S.C. 1517 occurred in account 24-8440, the Employees Health Benefits Fund, in the total amount of $194,271,795. The violation occurred in early October 2022, as experience-rated carriers participating in the Federal Employees Health Benefits Program (FEHBP) filed end of fiscal year 2022 financial information. OPM incurred in benefit payment obligations to health plans and insurance carriers who provide health benefits coverage to Federal employees, retirees and their dependents that exceeded the value apportioned by the OMB. Importantly, the Employees Health Benefits Fund, which incurred more than $62 billion of benefit payment obligations in fiscal year 2022, had and has sufficient resources to cover the full obligation. The total value of benefit payment obligations is not known until after the conclusion of the fiscal year, when participating carriers report on liabilities, including the value of incurred but unpaid health insurance claims.

3.0 Audit Recovery

Funding an outside Recovery Audit and Activities Program for either of its reported (RS or FEHB) programs is not cost-effective. The Payment Integrity Information Act of 2019 (PIIA) requires any program that expends at least $1 million during the year to implement recovery audits, if cost-effective to the agency, to recover improper payments. The Act also allows agencies to exclude place programs with other mechanisms to identify and recapture overpayments. The Retirement Program and the FEHB Program have extensive internal recovery mechanisms and anticipate achieving continued high recovery rates for improper payments.

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