H.R. 1533 — PIIA Reform Act

This section establishes within the Office of Federal Financial Management the position of Director of Improper Payment Mitigation, referred to as the “Overpayment Czar,” appointed and removable by the Director of the Office of Management and Budget under the direction of the Controller of that office. The Overpayment Czar must (1) assist executive agencies in identifying, preventing, and mitigating improper payments and fraud in federal programs; (2) develop and recommend strategies to address improper payments in agency payments; and (3) annually submit to the Controller a report proposing corrective actions to improve payment integrity and combat fraud government-wide. (As background, improper payments—defined in 31 U.S.C. §3351 as payments that should not have been made or that were made in an incorrect amount, including overpayments and fraud—totaled approximately $236 billion across federal programs in FY2023.) The Overpayment Czar may recommend policy changes to agency chief financial officers to develop reliable improper payment estimates.

This section modifies executive agency financial management plan requirements under 31 U.S.C. 3512(a)(3) by (1) adding the Overpayment Czar to the list of responsible officials (after the Controller of the Office of Federal Financial Management) and (2) requiring the plans to include a strategy to decrease improper payments (as defined in 31 U.S.C. 3351) throughout executive agencies.

This section expands the criteria under 31 U.S.C. 3352(a) for executive agencies to identify programs and activities susceptible to significant improper payments (i.e., improper payments plus undetermined payments exceeding $10 million and 1.5% of outlays or $100 million in the prior fiscal year) by adding (1) any new federal program making more than $100 million in payments in its first year of operation; (2) any program with an outstanding Inspector General recommendation under subsection (b)(2)(E); and (3) any new federal program expected to have outlays exceeding $100 million in any of its first three fiscal years that is in its first four years of operation. It further requires agencies to separately identify as susceptible any such new program under a new paragraph (a)(4) unless a review under paragraph (a)(1) determines otherwise (Thus, more new and high-outlay programs must undergo risk assessments every three years, considering factors such as program complexity and changes in funding or procedures.). This section also (1) authorizes the Secretary of Health and Human Services to require states to report data necessary for improper payment estimates in the Temporary Assistance for Needy Families (TANF) program (42 U.S.C. 617); (2) directs a 5% sequestration reduction (increasing to 10% for two or more years) in an agency's highest-level administrative appropriation account for persistent noncompliance with payment integrity requirements under 31 U.S.C. 3353; (3) requires agencies to report annually for 10 fiscal years, in their annual financial statements, on progress implementing financial controls, Government Accountability Office fraud risk principles, and Office of Management and Budget Circular A-123 leading practices for managing fraud risks (including the 11 practices in GAO's 2015 framework) under 31 U.S.C. 3357(d); and (4) adds a new section 3359 to chapter 33 of title 31, U.S. Code, requiring states receiving federal funds in specified programs to use applicable payment integrity tools and report on their effectiveness.