H.R. 1533: PIIA Reform Act

HR1533, the “PIIA Reform Act,” would create a new federal watchdog called the Director of Improper Payment Mitigation — nicknamed the “Overpayment Czar” — inside the Office of Federal Financial Management. That official would work under the Controller, be appointed and removable by the Director of the Office of Management and Budget, and help executive agencies identify, prevent, and reduce improper payments and fraud. The Czar would also send the Controller an annual report with proposed corrective actions and could recommend policy changes to agency Chief Financial Officers to improve estimates of improper payments.

The bill also broadens the list of programs that automatically get extra scrutiny. A program would be treated as “susceptible to significant improper payments” if it makes more than $100,000,000 in payments in its first year, or if a new program is expected to have outlays above $100,000,000 in any 1 of its first 3 fiscal years while still within its first 4 years of operation. Programs with outstanding Inspector General recommendations on improper payments would also be swept in. Agency heads could still exempt a program, but only after a review finds it is not actually susceptible to significant improper payments.

The enforcement piece is the sharpest part of the bill. If an executive agency is noncompliant for 1 year, its highest-level administrative appropriation account would be cut by 5% of total budget authority listed in the final sequestration report. If noncompliance lasts 2 or more years, that cut jumps to 10%. Agencies would also have to file annual reports for the first fiscal year after enactment and the next 9 fiscal years, covering internal controls, fraud-risk practices under GAO standards, OMB Circular A-123, weaknesses in areas like payroll and grants, and progress on the 11 leading practices in the July 28, 2015, GAO fraud-risk framework report.

States would face new rules too. Beginning 1 year after enactment, states running TANF, Medicaid, SNAP, Federal-State unemployment compensation, and WIC would have to use payment integrity tools published by the OMB Director and submit a report every year by September 30 on how those tools were used and how well they worked. If a state fails to use the required tools, it must send money to the Treasury equal to the total amount of overpayment in the covered program. The bill also makes the federal “Do Not Pay” working system permanent by removing the current 3-year limit and expands it from checking only for payments to deceased individuals to all authorized uses.