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 2024 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 2024, OPM has identified two major programs that qualify as Phase II programs in accordance with the PIIA and OMB’s Circular A-123 guidance: Federal Retirement Services and the FEHBP. These programs have risk of significant erroneous payments and therefore require additional annual analysis and reporting. All other OPM programs have been deemed Phase I which are less susceptible to significant erroneous payments; however, still require assessments to be conducted on a three-year cycle.

Retirement Program

OPM paid $106.9 billion in defined benefits to retirees, survivors, representative payees, and families during FY 2024 under the CSRS and 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 FEHBP 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 FEHBP 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.

HI administers the FEHBP through contracts with participating carriers that provide health benefit plans to FEHB members. Two types of carriers participate in the program: ERCs and CRCs. ERCs maintain separate accounting for their FEHBP 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 CFO is the Senior Accountable Official for the Payment Integrity Program. The OCFO chairs an Improper Payment Working Group that meets monthly to provide an open forum across the agency.

Retirement Program

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 2024, RS properly paid 99.68 percent of annuity payments and improperly paid 0.32 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 the FY 2024 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 identified below.

RS is committed to reducing improper payments as much as practicable. In 2019, the Fraud Branch was established under the RS 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 (SSA) Death Master File) to learn of some of these status changes. Delayed reporting of the status changes, or sometimes no reporting by 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 exercise broad authority in their day-to-day oversight of FEHB carriers through benefit and rate negotiations, contract compliance, review of large provider contracts and sub-contracts, defense of lawsuits, adjudication of disputed claims, and more. Accountability is inherent in contracting officers’ routine activities, such as the use of work plans, resolving recommendation, amending FEHB contracts and audit resolutions activities.

Healthcare and Insurance’s oversight of carriers includes the FEHB Plan Performance Assessment (PPA), which uses key parameters of clinical quality, customer service, resource use, and contract oversight to assess carrier performance and determine annual profit. Using these parameters the annual performance assessment assists OPM in recognizing strong performing health insurance carriers in the program, informing enrollee choice, and linking objective performance to profit. PPA provides an incentive for strong carrier overall performance, encouraging health plans to provide quality care and member experience. PPA provides consistent, objective, performance standards and ensures increased transparency for enrollees. During the 2024 contract year scoring cycle, on average, the FEHBP continued to perform above the national commercial mid-point (50th percentile) in the following high-priority metrics: controlling high blood pressure, diabetes care, avoidance of antibiotic treatment for acute bronchitis/bronchiolitis, and imaging for low back pain.

Delayed Reporting - The FEHBP will not report an improper payment estimate in FY 2024. OPM developed a new improper payment methodology in FY 2023 and actively engaged with agency stakeholders and FEHB carriers to meet the PIIA requirements. However, FEHB ERCs need time to collect, audit, and report their data back to OPM. We fully expect to report in FY 2025. More details of these efforts are explained in the OMB Data Call published on PaymentAccuracy.gov.

Actions Taken - OPM is expeditiously implementing the actions needed for OPM to be compliant with PIIA reporting. In FY 2022, OPM’s OCFO, RMIC office performed a risk assessment of the FEHB Program. That risk assessment determined the FEHB Program was susceptible to significant improper payments, thus requiring OPM to report an improper payment estimate in FY 2023. OPM immediately started developing a new improper payment methodology. While developing the new methodology, OPM determined that the FEHBP should be differentiated into two activities for OMB reporting purposes. The FEHBP has different contracts, payment structures, and improper payment types for the ERCs and CRCs, meriting meaningfully different sampling and estimation methodology plans. Off-cycle risk assessments were conducted for both new activities, with only the FEHB ERCs determined susceptible to significant improper payments. As the CRCs activity was not determined to be susceptible to significant improper payments, OPM is not required to report an improper and unknown payment estimate.

In FY 2024, OPM issued Carrier Letter 2024-15 Guidance on Audited Financial Statements for Federal FY 2024. This Carrier Letter included the 2024 FEHBP Financial Reporting and Audit Guide, which provides detailed requirements for the financial reporting for all FEHB ERCs, including audit requirements and improper payment reporting. In FY 2024, OPM conducted training on the Financial Reporting and Audit Guide for all ERCs and their Independent Public Accountants. OPM requires time to implement the new improper payment methodology, as the FEHB ERCs need time to collect, audit, and report their data back to OPM. OPM anticipates being compliant with PIIA in FY 2025.

Other Programs

OPM’s other programs have been deemed Phase I based on criteria defined in OMB’s A-123, Appendix C. These programs are defined as low risk of having significant improper payments. If there are no significant changes to the program, risk assessments are conducted on a three-year recurring cycle. Four programs completed their annual risk assessments in FY 2024, and all remained unchanged and continue to report as Phase I. These programs include vendor payments, payroll, travel and purchase cards.

3.0 Audit Recovery

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. OPM has determined that funding an outside Recovery Audit and Activities Program for either of its major reported (RS or FEHB) programs is not cost-effective. PIIA also allows agencies to exclude programs with other mechanisms to identify and recapture overpayments. The Retirement Program and the FEHBP have extensive internal recovery mechanisms and anticipate achieving continued high recovery rates for improper payments.

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