DoD Inspector General finds DoD overpayments report inaccurate and incomplete

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DoD Inspector General finds DoD overpayments report inaccurate and incomplete

The Department of Defense’s efforts to identify and recover improper payments are not adequate to collect and report comprehensive data on overpayments, according to a report prepared by the DoD Inspector General (DoDIG).  The DoDIG reviewed DoD’s methodology and quarterly report to determine compliance with Executive Order 13520, which required each agency to publish a quarterly report on high dollar overpayments.  A high dollar overpayment is defined as any overpayment that is over 50 percent of the intended payment.

As a result of its review, the DoDIG said DoD’s First Quarter FY2010 High Dollar Overpayments Report was “inaccurate and incomplete.”  Specifically, DoDIG charged that DoD 1) did not review 55 percent ($167.5 billion) of the $303.7 billion in outlays to identify overpayments, 2) did not report some overpayments, and 3) did not include enough information on recoveries or corrective actions.   

In addition, the report found weaknesses in the methodology used by the Defense Accounting and Finance Service (DFAS) to prepare a list of commercial overpayments.  According to the report, DFAS gathered information from only two systems—Contractor Debt System (CDS) and Improper Payments Online Database (IPOD).  However, the report identified six systems that did not report contract entitlement systems improper payments into either CDS or IPOD.  The report also criticized DFAS for not fully reviewing collections for civilian and military pay and travel and retired annuitant pay, and excluding civilian Permanent Change of Station (PCS) travel payments or military health benefits payments.  

The DODIG report recommended that the Under Secretary of Defense (Comptroller/CFO) improve its methodology for identifying and reporting high dollar overpayments to ensure that all DoD outlays are reviewed for high dollar overpayment and to disclose payment areas that are not reviewed.  The report also recommended that the Director of DFAS develop procedures to conduct samples of commercial pay entitlement systems and improve internal controls to ensure that travel payments go to only those individuals with valid Social Security numbers. 

The DoDIG report urged DOD to move quickly to address the inadequacies found and the recommendations made in the report.  The report warned that if DoD did not act to improve data collection and oversight it “will continue to understate the Department’s high dollar overpayments and error rate.”

In a response (included in the report) to the DoDIG recommendations, DoD’s Deputy Chief Financial Officer (DCFO) DoD will develop a plan to improve oversight of high dollar value overpayments reporting and will review all payment and collection areas for disclosure in the report.  However, due to resource and time constraints DoD cannot review all individual payments, but will conduct a statistical sample to identify individual high dollar overpayments to meet the requirements of the Executive Order. 

Responding to the report for DFAS, the Acting Director for Standards and Compliance stated that DFAS plans to conduct a risk assessment on entitlement systems not currently using current procedures to report improper payments.  After that assessment is complete, DFAS will evaluate the need to develop a sampling plan.  Currently, DFAS said it does require reporting on actual improper payments into its database.  Regarding review of civilian, military, travel, and retirement pay, DFAS said it decided to review random samples to identify high dollar value overpayments.  And, while it does not review travel pay collections, DFAS said it does review travel pay overpayments identified in monthly random audits and database comparisons.  It also conducts random reviews of retired pay accounts.  DFAS stated that completion of these improvements combined with ongoing procedures meets the intent of the Executive Order.

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One Comment

  1. J.Hern February 17, 2012 at 4:03 pm

    I would like to know what qualifies as a bona fide need or a dollar threshold for the Military Healthcare System/Tricare Management Activity to seek assistance from a third party or utilize their oversight recovery sources? In June 2011, Tri-State Medical submitted 72 healthcare claims for over $200K in overpayments for the Military Healthcare System and 11 of the claims were high dollar payments. My suggesstion is that the MHS seek third party to target the area providers that have limited resources and limited knowledged and or expertise to resolve the oversights within their system. The oversight can not be resolved from a corporate position. All the systems that are available never can replace the ability to interact with the provider and identify what may be going on on the receivable end of the process. The claims submitted, they were not requested by MHS and they were over a year old.

    Please call or email me and I can provide further detail as to a way they can better capture over 90% of their oversight payments and this is not a solicitation. The $267,577.64 was submitted to the agencies free of charge. No fees for the provider or MHS. This was in an effort to bring awareness to MHS that they are not capturing everything.

    Thanks and have a great day.

    Jackie
    Oversight Consultant
    334-290-2877

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