There’s one smart reform in both the House and Senate versions of H.R. 2, the 5-year farm bill, that has flown under the radar despite the fact that it could save taxpayers billions of dollars if done properly. With all eyes on big debates over work requirements for Supplemental Nutrition Assistance Program (SNAP) recipients, changes to conservation programs, and the agribusiness safety-net, it could be easy to miss the expansion of the National Accuracy Clearinghouse (NAC or Clearinghouse) from pilot to full-time program in order to improve SNAP’s program integrity. This expansion should be paired with reforms that allow private contractors to play a larger role in reining in improper payments in order to better address long-standing problems with SNAP.
SNAP has languished for years on the Office of Management and Budget’s (OMB) “high risk” list both for the high volume of taxpayer funds it disburses and its astonishing - growing! - rate of improper payments. A June 2018 report from the U.S. Department of Agriculture (USDA) found that the estimate of improper payments for fiscal year 2017 had almost doubled, to 6.3 percent from 3.66 percent in 2014, for a total of almost $4 billion. This leap was attributed not to an increase in improper payments, but improved reporting and oversight, which isn’t reassuring to taxpayers whose funds were wasted on even more improper payments than had been previously suspected.
Improper payments are a serious and very costly issue for taxpayers. A May 2018 Government Accountability Office (GAO) report pegged total improper payments at almost $141 billion for FY17. GAO did note problems, specifically with SNAP, in coming to those results. The study was supposed to focus on 11 programs, but of those only one, SNAP, couldn’t provide an estimate at the time. Previous GAO reports examining SNAP’s ongoing fraud and improper payment problems regularly pointed to the same culprits: administrative errors caused by data quality and staffing issues.
The expanded Clearinghouse reform aims to solve the first problem through improved data-matching between states to prevent dual-enrollment. In the Senate version of the farm bill the Congressional Budget Office (CBO) scored this specific provision as saving $588 million over 10 years. That’s a good first step, but it doesn’t resolve the staffing issue that states say is a major contributor to the lack of accountability, investigation, and follow through that drive up improper payments.
Luckily, Senator Ernst (R-IA) and Representative Faso (R-NY) introduced amendments to H.R. 2 that would permit states to contract out these administrative roles to private companies, increasing both their workforce and funding flexibility. Faso’s amendment went on to pass on the House floor, 222-192, putting this important reform in play for the ongoing farm conference process.
Contractors have played similar roles in numerous other social welfare programs, including Temporary Assistance for Needy Families (TANF) and the Children’s Health Insurance Program (CHIP), where they helped states bring error rates down dramatically. Medicare’s innovative Recovery Audit Contractor (RAC) program, which used contractors on a contingency basis, at no cost to taxpayers, returned $9.7 billion to the trust-fund coffers. Independent, competitive contractors not only have a great track record when it comes to addressing improper payments, they bring in other savings as well, through reduced personnel costs. Based on these successes, reduced error rates could save taxpayers more than $3 billion a year.
With trillion-dollar deficits on the horizon, Members of Congress should pursue every opportunity to save taxpayer funds. Utilizing private contracts to reduce improper payments is a proven model. Farm bill conferees should make sure that states have all the tools they need, including this kind of administrative flexibility, to be better stewards of our resources.