Five ways to fight fraud, waste, and abuse in $2 trillion coronavirus relief aid

With the passage of the Coronavirus Aid, Relief, and Economic Security (CARES) Act, Congress and the administration have provided well over $2 trillion in aid. This is larger in scope and scale than any prior stimulus — more than double the American Recovery and Reinvestment Act of 2009.

The CARES Act provides benefits for individuals and businesses through a combination of new programs, one-time-only actions, and significant expansions of existing programs. Yet, making so many payments, to so many people, in such a short time is a tremendous challenge.

Getting money into the hands of those who need it fast is the priority. But ensuring that the money goes only to those eligible also requires strong oversight from the start to prevent fraud, waste, and abuse of taxpayer money.

Why? Because the numbers are so massive. When the Recovery Accountability and Transparency Board (RATB) was created in 2009 to oversee the distribution of over $700 billion in stimulus, Earl Devaney, then the board’s chairman, stated that an average of 7 percent of government expenditures are misdirected through errors or fraud.

If you apply the same unacceptable percentage to the CARES Act stimulus, that’s potentially $140 billion paid out in error or to fraudsters. If allowed to happen, this will siphon funds from those who need it, restrict future spending options, and undermine public confidence in government.

Instead, the imperative for the government is to have a dynamic, agile capability to detect potential fraud and waste — while releasing the money now to the individuals and businesses who desperately need the assistance.

The CARES Act establishes the Pandemic Response Accountability Committee to monitor the distribution of stimulus funds. Modeled after the RATB, this committee will play a key role in ensuring the integrity of CARES Act implementation. The committee will be responsible for detecting fraudulent activity, building and maintaining analytic capabilities, and taking action when fraud, waste, or abuse is found.

We recommend that the new committee, along with all agencies responsible for implementing provisions of the CARES Act and others, take the following five steps: 

• Create a data aggregation and analytic team under the committee to partner with academia and the private sector and coordinate with relevant agencies. This team will apply advanced analytic tools, techniques, and datasets from the public and private sectors to provide programmatic guidance. They will monitor spending activities; to identify potential errors and root causes, so they can be systemically fixed. They’ll advise agencies about simplifying eligibility and application rules to best serve the public, minimize errors, and deter fraud; and they’ll partner with law enforcement agencies to identify and minimize fraud.
• Agencies responsible for significant amounts of new spending should establish domain-specific public-private partnerships and establish information sharing and analysis centers (known as ISACs), such as the existing Identity Theft Tax Refund Fraud ISAC. Through these mechanisms, both government agencies and private-sector entities will find ways to share information about common risks, emerging fraud campaigns, and ways to counter them.
• Develop and share more broadly advanced analytics approaches and data for the greater good. Analytics shown to be effective but not widely used (such as social media analytics) need to be more widely considered. Data sharing is now easier via provisions in the recently enacted Payment Integrity Information Act of 2019.
• Seek temporary relief from statutory restrictions on sharing and using some datasets across agencies in order to both support eligibility verification and help individuals accelerate confirmation and receipt of benefits. This will also help identify potential cross-program fraud.
• Avoid “pay & chase” by focusing on preventing errors and deterring fraud, rather than identifying them after the fact. Pay & chase is a fundamentally flawed approach. It’s expensive and ineffective; agencies typically get less than 50 percent back. Fraudsters take advantage of that — and both the intended recipients and taxpayers lose out.

These actions can be taken quickly, and we know from experience that they work. And while it’s essential we focus on payment integrity during implementation of the CARES Act, there’s also a potential long-term benefit. Keeping the right analytics and resources in place around all federal government payments will only strengthen government-wide payment integrity.

As the nation faces this monumental challenge, it’s vitally important to take these immediate steps to minimize fraud, waste, and abuse while ensuring that all Americans receive their full and accurate benefits.

Jim Cook is vice president of strategic engagement and partnerships at MITRE. He served as vice president and director of the Center for Enterprise Modernization (CEM), the federally-funded research and development center sponsored by the Department of the Treasury. He provided advice and support — during its creation and throughout its operation — to the Recovery Board, charged with overseeing nearly $800 billion in stimulus from the American Recovery and Reinvestment Act of 2009 to ensure its accurate distribution, and he was a partner and executive with IBM Business Consulting and a consulting partner with PricewaterhouseCoopers. Past experiences in the private sector include developing and modernizing claims administration programs with the Social Security Administration, FEMA, the Department of Labor and the State of New Jersey’s Department of Insurance.

Gordon Milbourn III is the payment integrity portfolio leader at MITRE and has led a number of studies on federal payment integrity. He has served as subject matter expert on projects for the IRS, Centers for Medicare and Medicaid Services, FEMA and the Veterans Benefits Administration. Previously, he served as Assistant Inspector General for Audit for both the Postal Service and for the Treasury Inspector General for Tax Administration.