Office of Personnel Management

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.

OPM conducts improper payment risk assessments on a three-year cycle, or more often if there are significant changes in the program. OPM conducted improper payments risk assessments for two Phase I programs during FY 2023: Federal Employees Group Life Insurance and Federal Employees Health Benefits Community-Rated Activity; and four Phase I programs during FY 2024: Vendor Payments, Travel Cards, Purchase Cards, and Payroll. All of these programs remained Phase I programs. OPM continues to only have two Phase II programs: Retirement Services and Federal Employee Health Benefits Experience-Rated Carriers.

Retirement Services (RS) Program provides Federal employees, retirees, and their families with benefits that offer choice, value, and quality to be a competitive employer. In FY 2025, RS properly paid 99.67 percent of annuity payments and improperly paid 0.33 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 2025 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. RS remains committed to ensuring the rate of improper payments remains at 0.38 percent or less. 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. OPM conducted several matches (such as the Social Security Administration’s Death Master File) and annual surveys. Anomalies identified in these matches and surveys are researched by OPM and, if needed, referred to the OIG. 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.

For Federal Employees Health Benefits (FEHB) and Postal Service Health Benefits (PSHB) Programs, under the oversight of the Healthcare and Insurance, contracting officers exercise broad authority in their day-to-day oversight of FEHB and PSHB 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. In FY 2025, FEHB Experience-Rated Carriers (ERC) activity is reporting a statistically valid improper and unknown payment estimated amount and rate. The ERC activity reports one year in arrears, based on the time necessary to collect, test, report and aggregate the data. Because the ERC activity reports in arrears, PSHB data is not included in the IP estimate being reported in 2025. Independent public accountants (IPAs) provide the data by conducting sampling, testing and reporting of transactions performed by carriers as required in the Financial Reporting and Audit Guide’s Agreed Upon Procedures. Based on the results of the sampling and testing for 2024, the FEHB ERCs properly paid 99.86 percent of payments and improperly paid 0.14 percent. The improper payment estimates include overpayments, underpayments, technically improper payments and unknown payments. The total amount of all improper and unknown payments is $94.8 million, including $26.9 million in overpayments, $44.5 million in technically improper and underpayments, and $23.4 million in unknown payments. ERCs reporting improper and unknown payments are required to submit corrective action plans designed to prevent or mitigate the causes of improper or unknown payments. The most common corrective actions planned and taken are training and process changes. ERCs are required to report on the status of all findings, including prior years’ findings. OPM will review and monitor those.

In the FY 2024 annual compliance audit, OPM OIG found that OPM’s FEHB Program was not in compliance with four of the ten Payment Integrity Information Act of 2019 (PIIA) reporting requirements: (1) Published improper payment and unknown payment estimates for programs susceptible to significant improper payments and unknown payments in the accompanying materials to the annual financial statement; (2) Published corrective action plans for each program for which an estimate above the statutory threshold was published in the accompanying materials to the annual financial statement; (3) Demonstrated improvements to payment integrity or reached a tolerable improper payment and unknown payment rate; (4) Reported an improper payment and unknown payment estimate of less than 10 percent for each program for which an estimate was published in the accompanying materials to the annual financial statement.

OPM developed a new Sampling and Estimation Methodology Plan with active engagement from agency stakeholders and FEHB ERC to meet the PIIA requirements. In FY 2024, OPM issued the 2024 FEHBP Financial Reporting and Audit Guide, which provides detailed requirements for the financial reporting for all FEHB ERC, including audit requirements and improper payment reporting. OPM has received statistically valid data from all FEHB ERC which estimates the IP amount for each Carrier. OPM has aggregated this data and projected a statistically valid IP estimate for the entire FEHB ERC activity and is reporting this estimate as required by PIIA as reported above.