New Research Highlights Government Wastage Exceeds $125 Billion of Improper PaymentsMarch 28, 2012 No Comments
Accurate, Complete and Timely Data Needed to Combat Multi-Billion Dollar Problem
- According to a newly published research note from IDC Government Insights, improper government payments totaled a staggering $125 billion at the U.S. federal level in 2010, with human services programs alone racking up more than $71 billion. The federal government recently reported an estimated $115 billion in improper payments in 2011, a slight improvement over 2010.
- Representing a heavy drain on government budgets, and plaguing state and local agencies as well as federal programs, improper payments comprise misdirected payments, over- and under-payments, and improper use of received payments.
- Among the realities and recommendations presented in the white paper, which is sponsored by Informatica, titled, “Helping Governments Reduce Improper Payments“, the findings include:
- The eligibility portion of human services contributes heavily to the problem, due in large part to a “lack of accurate, complete and timely data; data entry errors; name variations; and a lack of comparative data.”
- While agencies are improving their ability to recover improper payments, taxpayer resources are best protected by prevention of payment errors before they occur.
- In addressing the problem, “flexible master data management solutions offer maximum return… without requiring wholesale rearchitecting of the data enterprise.”
In the research note, IDC Government Insights research vice president, Thom Rubel, responds to questions posed by Informatica on behalf of its government customers, providing insights into such topics as:
- Increasing impact of improper payments – The Office of Management and Budget (OMB) has identified 14 federal programs as “high error” in regards to payments. But the problem also spills over into state and local governments, which use federal funds to operate programs such as Medicaid. According to IDC, state governments need to improve transparency and performance to ensure program compliance and make best use of tightening funds, particularly in face of the looming expansion of Medicaid recipients under the Patient Protection and Affordable Care Act.
- IT approaches to addressing improper payments – Improved information sharing across agencies and programs is vital to reducing improper payments. To this end, governments should review databases relevant to eligibility and address data management at the enterprise level. Technologies being leveraged to prevent improper payments include master data management, data matching, predictive modeling and data mining. IDC believes these and other efforts should be supported by “flexible master data management solutions” to ensure consistency and availability of relevant data without necessitating a revamp of the systems environment.
- Longer-term prospects for reducing improper payments – As governments increasingly embrace transparency and accountability, data is becoming even more valuable to their operational efficiency. New and innovative data management solutions leveragable for preventing improper payments also support longer-term efficiency goals.
- Unique public-sector considerations for selecting a vendor – According to IDC, a good vendor understands the government operating and program environment, and offers a technology solution that adapts to existing systems and architectures and helps reduce IT costs and improve program ROI. Specific to reducing improper payments, the solution needs to improve data quality and accessibility, synchronize multiple data sources and ensure compliance with data privacy and retention policies.
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- “In short, improper payments are a very significant contributor to budget overruns at a time when government agencies are under tremendous budget limitations,” said Thom Rubel, research vice president, IDC Government Insights. “To improve shared data that are key to preventing improper payments, government agencies may need to redesign or reconfigure their systems, which can be costly and time consuming. However, as more innovative and viable data management solutions rapidly penetrate the market, prospects are quickly improving for minimizing improper payments as part of longer-term program efficiency goals.”
- “Combating improper payments is clearly a matter of ‘an ounce of prevention is worth a pound of cure’,” said Bill Sullivan, vice president and general manager, Public Sector, Informatica. “The technology exists to ensure governments have the reliable, timely and trusted data to halt improper payments. Governments should be deploying master data management and other such technologies to tame this problem and save the taxpayer billions.”
Informatica Corporation (NASDAQ: INFA) is the world’s number one independent provider of data integration software. Organizations around the world rely on Informatica for maximizing return on data to drive their top business imperatives. Worldwide, over 4,630 enterprises depend on Informatica to fully leverage their information assets residing on-premise, in the Cloud and across social networks. For more information, call +1 650-385-5000 (1-800-653-3871 in the U.S.), or visit www.informatica.com. Connect with Informatica at http://www.facebook.com/InformaticaCorporation, http://www.linkedin.com/company/informatica and http://twitter.com/InformaticaCorp.