“Fraud Prevention: Understanding Fraud in Federally Funded Programs Run by the States”

1[House Hearing, 119 Congress]2[From the U.S. Government Publishing Office]34                           FRAUD PREVENTION:5                    UNDERSTANDING FRAUD IN FEDERALLY6                   FUNDED PROGRAMS RUN BY THE STATES78=======================================================================910                                HEARING1112                               before the1314                 SUBCOMMITTEE ON GOVERNMENT OPERATIONS1516                                 of the1718              COMMITTEE ON OVERSIGHT AND GOVERNMENT REFORM1920                     U.S. HOUSE OF REPRESENTATIVES2122                    ONE HUNDRED NINETEENTH CONGRESS2324                             SECOND SESSION2526                               __________2728                             APRIL 15, 20262930                               __________3132                           Serial No. 119-613334                               __________3536Printed for the use of the Committee on Oversight and Government Reform3738                 [GRAPHIC NOT AVAILABLE IN TIFF FORMAT]3940    Available on: govinfo.gov, oversight.house.gov or docs.house.gov4142                               ______4344                 U.S. GOVERNMENT PUBLISHING OFFICE454663-450 PDF                WASHINGTON : 20264748              COMMITTEE ON OVERSIGHT AND GOVERNMENT REFORM4950                    JAMES COMER, Kentucky, Chairman5152Jim Jordan, Ohio                     Robert Garcia, California, Ranking53Mike Turner, Ohio                        Minority Member54Paul Gosar, Arizona                  Eleanor Holmes Norton, District of55Virginia Foxx, North Carolina            Columbia56Glenn Grothman, Wisconsin            Stephen F. Lynch, Massachusetts57Michael Cloud, Texas                 Raja Krishnamoorthi, Illinois58Gary Palmer, Alabama                 Ro Khanna, California59Clay Higgins, Louisiana              Kweisi Mfume, Maryland60Pete Sessions, Texas                 Shontel Brown, Ohio61Andy Biggs, Arizona                  Melanie Stansbury, New Mexico62Nancy Mace, South Carolina           Maxwell Frost, Florida63Pat Fallon, Texas                    Summer Lee, Pennsylvania64Byron Donalds, Florida               Greg Casar, Texas65Scott Perry, Pennsylvania            Jasmine Crockett, Texas66William Timmons, South Carolina      Emily Randall, Washington67Tim Burchett, Tennessee              Suhas Subramanyam, Virginia68Lauren Boebert, Colorado             Yassamin Ansari, Arizona69Anna Paulina Luna, Florida           Wesley Bell, Missouri70Nick Langworthy, New York            Lateefah Simon, California71Eric Burlison, Missouri              Dave Min, California72Elijah Crane, Arizona                Ayanna Pressley, Massachusetts73Brian Jack, Georgia                  Rashida Tlaib, Michigan74John McGuire, Virginia75Brandon Gill, Texas76Richard McCormick, Georgia7778                                 ------7980                       Mark Marin, Staff Director81                   James Rust, Deputy Staff Director82                     Ryan Giachetti, Chief Counsel83           Jennifer Kamara, Director of Strategic Initiatives84                      Mary Woodard, Senior Counsel85                 Emily Allen, Professional Staff Member86                      Bill Womack, Senior Advisor87         Mallory Cogar, Director of Operations and Chief Clerk8889                      Contact Number: 202-225-50749091                Robert Edmonson, Minority Staff Director92                      Contact Number: 202-225-50519394                                 ------9596                 Subcommittee on Government Operations9798                     Pete Sessions, Texas, Chairman99100Virginia Foxx, North Carolina        Kweisi Mfume, Maryland, Ranking101Gary Palmer, Alabama                     Member102Tim Burchett, Tennessee              Eleanor Holmes Norton, District of103Brian Jack, Georgia                      Columbia104Brandon Gill, Texas                  Maxwell Frost, Florida105                                     Emily Randall, Washington106107                         C  O  N  T  E  N  T  S108109                              ----------110111                           OPENING STATEMENTS112113                                                                   Page114115Hon. Pete Sessions, U.S. Representative, Chairman................     1116117                               WITNESSES118119Mr. Seto Bagdoyan, Director, Forensic Audits and Investigative120  Service, U.S. Government Accountability Office121Oral Statement...................................................     4122123Dr. O.J. Oleka, Chief Executive Officer, State Financial Officers124  Foundation125Oral Statement...................................................     6126127Ms. Allison Ball, Auditor of Public Accounts, Commonwealth of128  Kentucky129Oral Statement...................................................     7130131Mr. Robert Westbrooks (Minority Witness), Former Executive132  Director, Pandemic Response Accountability Committee133Oral Statement...................................................     9134135Written opening statements and bios are available on the U.S.136  House of Representatives Document Repository at:137  docs.house.gov.138139                           INDEX OF DOCUMENTS140141  * Letter, from Dr. Stack to Auditor Ball re Medicaid Concurrent142  Enrollment; submitted by Rep. Mfume.143144  * Letter for the Record, from AV SFR; submitted by Rep.145  Sessions.146147  * Letter for the Record, from Program Integrity Alliance;148  submitted by Rep. Sessions.149150  * Letter to Cheryl Mason of CIGIE; submitted by Rep.151  Walkinshaw.152153The documents listed above are available at: docs.house.gov.154155                          ADDITIONAL DOCUMENTS156157  * Questions for the Record: Mr. Seto Bagdoyan; submitted by158  Rep. Sessions.159160  * Questions for the Record: Mr. Robert Westbrooks; submitted by161  Rep. Mfume.162163These documents were submitted after the hearing, and may be164  available upon request.165166                           FRAUD PREVENTION:167                    UNDERSTANDING FRAUD IN FEDERALLY168                   FUNDED PROGRAMS RUN BY THE STATES169170                              ----------171172                       WEDNESDAY, APRIL 15, 2026173174                     U.S. House of Representatives175176              Committee on Oversight and Government Reform177178                 Subcommittee on Government Operations179180                                                   Washington, D.C.181182    The Subcommittee met, pursuant to notice, at 10:06 a.m.,183Room 2154, Rayburn House Office Building, Hon. Pete Sessions,184[Chairman of the Subcommittee] presiding.185    Present: Representatives Sessions, Comer, Foxx, Burchett,186Norton, Frost, and Randall.187    Also present: Representative Walkinshaw.188    Mr. Sessions. The Subcommittee on Government Operations189will come to order.190    And I would like to welcome everyone. This is a room that191we have been without for about a year, and so this is the first192Subcommittee or Committee meeting that we have held. And I193would like to say, Mr. Chairman, great job.194    Chairman Comer. On time, on budget. Not really, but pretty195close. Thank you, Mr. Chairman.196    Mr. Sessions. Well, I think that this is a beautiful room,197has always served as an opportunity for the American people to198be a part of it, and they will now see that we have new and199improved things on this side, TVs, ability to see things, and I200am very happy.201    So, without objection, as the Chair, I may declare recess202at any time. And I recognize myself for the purpose of making203an opening statement.204205          OPENING STATEMENT OF CHAIRMAN PETE SESSIONS206207                   REPRESENTATIVE FROM TEXAS208209    Good morning, and welcome back to the freshly refurbished210main Committee hearing room for the Government Reform and211Oversight Committee [sic]. For the past three years, Ranking212Member Mfume and I have worked together to understand and to213piece together the basic elements of fraud in Federal programs.214We work together. We see the problem together, but his insight215and my insight leads us to where we have to understand by216associating ourselves with government agencies and outside217people of what they see the fraud problem is.218    So, how does it happen? How can we fix it? How do we look219ahead about what may be next? How do we get the experts and220people who are in Federal Government and state government and221outside to know that we will not allow this to continue? We are222here to do something about it.223    So, I am pleased to announce that this work provides the224foundation for the Fraud Prevention and Accountability Act,225which I will be introducing today. We think it is a piece of226legislation that addresses leading-edge ideas to have the227Federal Government more accountable. For too long, too little228emphasis has been placed on preventing fraud. This legislation229changes the paradigm from pay-and-chase to prevention by230ensuring Treasury financial service can stop fraudulent231payments from ever going out in the first place.232    This is more than an idea. It is a concept that had to be233worked on by the Federal agencies who would be involved, and234they have provided their input. Just as important, if not more235so, it ensures the money intended for those who need it now236stand a better chance to get it.237    My bill also creates the Inspector General for fraud,238accountability, and recovery piece, which, in essence, creates239a permanent home for the anti-fraud, analytic, and240investigative capacities developed by the Pandemic Response241Accountability Committee, known as PRAC, that was established242at the end of COVID. I am hopeful that the provisions of this243bill will mark an important step in showing fraud is not just a244cost of doing business and something we are going to live with.245We need to be able to take the ideas and issues that we have246learned much from and put it into a piece of legislation247whereby our partners, including the Federal Government and248state governments, know that we are serious.249    Regardless, our work is far from over, and we will hear250that today. Today, we will focus on fraud that occurs in251Federal assistance programs that are administered by states252such as Medicaid, SNAP, and unemployment insurance.253    I want to make one thing perfectly clear, and that is that254while we are fresh off the heels of a full Committee255investigation in the hearings into fraud, this is not about one256state. This is not about Minnesota. It is not about any one257particular area. It is about where the Federal Government has258programs that work with the states, making sure we see the259alignment of who is responsible for what, who does the follow-260up, and who is accountable for--if the word whistleblower is261correct--to at least make sure that we are all aware where we262have a problem.263    So, we know that we have problems, however, not just264Minnesota. There is also Mississippi in which the state265auditor, Shad White, identified waste and fraud in Temporary266Assistance for Needy Families (TANF). TANF is a necessary267program and one that must be available to those who need it,268but the integrity of that program is at risk.269    So, while I am hoping to clearly identify today our prime270factors about why this happens, it is also who is responsible271for pinpointing these. At what point do we follow up, and who272is actually responsible for working to fix the things that we273have seen? Is there enough evidence in it for states to274aggressively prevent fraud? Do states feel like they can get275back to the Federal Government? Is the Federal Government276listening, or does the Federal Government turn a blind eye?277    We are going to vet these ideas, and today, we have an278opportunity to have people who bring real-life examples and279ideas, including, you will hear today, about one state where280the auditor has done over 400 audits in a year. That means that281you have got your hands on to programs and the incentives that282are associated with those to create good behavior.283    What changes are necessary in transparency in communities284is very important to us. So, we are going to hear from a285controller today who sees the effectiveness of the program but286also the things we need to do. Today's witnesses will help us287understand the root causes of state-level fraud and lay the288groundwork for additional action to ensure that taxpayer289dollars are appropriately used.290    So, today, we will move directly to the opportunity for291Members of Congress who are finding themselves today stretched292as they have their duties done, but I am going to waive on293several Members who have asked on a bipartisan basis to be here294today, without objection, Representative Boebert, Lauren295Boebert of Colorado, and Representative Walkinshaw of Virginia,296who finds himself here on a regular basis. I think he likes297this Committee, would be the assumption that I would make. So,298welcome on the Committee for the purpose of questioning the299witnesses at today's hearing, without objection.300    So, I am pleased to welcome our witnesses for today's301hearing. We spent a good bit of time yesterday in my office302listening to you, understanding that the things which you need303to bring to us need to be stated.304    Mr. Chairman, you understand that I do not have a quick305gavel. I want our witnesses to make their points, to feel like306that they can engage this Committee. This Committee is on a307bipartisan basis, very, very close to an association with each308other where we believe each other asks good questions. We309believe each other are after the same answers. We believe each310other has a goal in mind, and that is something that Mr. Mfume311and I have worked at for a number of years. So, each of our312witnesses today that I am getting ready to introduce should313feel like that they are in not just friendly territory but they314are in territory where we are asking them to make sure that315their words are clearly understood.316    So, I would first welcome Mr. Seto Bagdoyan, who is317Director for Audit Services in the U.S. Government318Accountability Office, Forensic Audits and Investigation319Services at GAO. He leads audits of major Federal programs320focusing on a range of programs and the integrity of those321programs and risk management, including fraud. We are delighted322he is with us.323    We then welcome Dr. O.J. Oleka, who is the Chief Executive324Officer of the State Financial Officers Foundation, a national325organization dedicated to advancing fiscal responsibility for326public policy, protecting taxpayer dollars, and promoting327economic freedom. Doctor, welcome.328    We also welcome Allison Ball. She is the elected Auditor of329Public Accounts for the Commonwealth of Kentucky. In this role,330she leads an independent office charged with auditing the331accounts and financial transaction of all spending agencies of332Kentucky and protecting taxpayer dollars from waste, fraud, and333abuse.334    And we add Mr. Robert Westbrooks, who is currently an335independent consultant. Until 2022, he served as Director of336the Pandemic Response Accountability Committee. He previously337served as Inspector General at the Pension Benefit Guarantee338Corporation and the U.S. Small Business Administration.339Welcome, Mr. Westbrooks. We are delighted that you are with us340today. So, thank you to each of you for joining us.341    I would now ask that each of you would rise for the342administration of the oath to our witnesses, raising your right343hand. Pursuant to Committee Rule 9(g), the witnesses will raise344their right hand and answer the following.345    Do you solemnly swear or affirm that the testimony that you346are about to give is the truth, the whole truth, and nothing347but the truth, so help you God?348    Mr. Bagdoyan. Yes.349    Dr. Oleka. Yes.350    Ms. Ball. Yes.351    Mr. Westbrooks. Yes.352    Mr. Sessions. Let the record reflect that each of the353witnesses--you may be seated--each of the witnesses answered in354the affirmative.355    And we welcome each of you. We are remembering that this356Subcommittee does mean it when we say all of the truth to where357you should not be bound by anything of a time constraint. We358want you to make your points made. So, we appreciate you being359here today.360    Let me remind the witnesses that while we have read your361written testimony, feel free to go well beyond that because I362think that as we get your oral statements on the record, you363will recognize that we are here to listen and learn from you.364    So, please remember that we have got a system here that365goes green light, yellow light, red light. As you get to the366red light, as you are able to effectively move your comments, I367understand that.368    So, I would now recognize Mr. Bagdoyan for his opening369statement. The gentleman is recognized.370371                   STATEMENT OF SETO BAGDOYAN372373      DIRECTOR, FORENSIC AUDITS AND INVESTIGATIVE SERVICE374375             U.S. GOVERNMENT ACCOUNTABILITY OFFICE376377    Mr. Bagdoyan. Thank you. Chairman Comer, Chairman Sessions,378distinguished Members of the Subcommittee, I am pleased to379discuss today at a high level the fraud risk landscape facing380state-administered, federally funded assistance programs. This381landscape has changed significantly and is evolving rapidly and382not in a good way in the long aftermath of the COVID pandemic.383Massive spending during that period exposed significant384weaknesses, which persist today in Federal and state capacity385to preemptively identify and manage fraud risks in multiple386joint programs.387    Illustrating this, GAO estimated a while ago that up to388$135 billion in pandemic-era unemployment insurance benefits,389or 15 percent of the total spending, was lost due to fraud390resulting from poor controls. Most of these losses were never391recovered.392    Spending on Federal assistance programs administered by393states exceeds about $1 trillion annually, rendering them394inherently at risk of fraud. In this regard, two such programs,395unemployment insurance and Medicaid, are on GAO's high-risk396list for significant program integrity weaknesses. Other397programs such as SNAP and TANF face substantial fraud risks and398have experienced actual fraud.399    What underscores the present state of the fraud risk400landscape is a fundamental failure by Federal and state401agencies to acknowledge that they exist, are significant, and402require decisive response. This mentality must change, and403quickly, to mitigate both the present and future risk404landscapes.405    As symptoms of the failure to acknowledge their existence,406principal factors contributing to fraud risks at the Federal407and state levels include absence of leadership priority to408drive effective responses; weak fraud risk management capacity409such as superficial risk assessments and counter-fraud410strategies; inadequate preventative front and backend controls,411especially regarding verifying identity, determining412eligibility, calculating benefit amounts and tracking their413duration; averting duplicate benefits across multiple414jurisdictions; and recovering financial losses. As I mentioned,415pandemic losses were recouped only at a cents-on-the-dollar416rate.417    Then, there is fund-and-forget postures regarding Federal418oversight of state activities, as well as restrictive program419design. It is very important to make note of precluding420stringent controls or allowing loose rules that exacerbate421risk, including the signal bane of auditors--unquestioned422program applicant self-attestation and certification.423    In a landscape that offers numerous opportunities for424exploiting risks, fraudsters are innovative and fast moving,425taking full advantage of technology, including artificial426intelligence to pursue their schemes. However, due to the427aforementioned lack of acknowledgement, Federal and state428agencies are not keeping up with cascading risk effects.429    I will close by stressing that the current fraud risk430landscape facing state-administered Federal programs involving431potentially significant financial losses is of great concern.432Of equal concern is the absence of decisive, comprehensive433Federal and state responses. This must be rectified, beginning434with an acknowledgement that this is a significant problem.435Sustained congressional oversight and comprehensive action,436such as that contemplated by the Oversight Committee, are437essential to eliciting an effective response.438    Mr. Chairman, this concludes my remarks. I look forward to439the Subcommittee's questions. Thank you.440    Mr. Sessions. Sorry, we are getting used to this. They441think I ought to be able to speak into a microphone.442    Thank you very much. We have much to speak about. Your443presentation opened up a lot of issues. Dr. Oleka, you are now444recognized.445446                    STATEMENT OF O.J. OLEKA447448                    CHIEF EXECUTIVE OFFICER449450              STATE FINANCIAL OFFICERS FOUNDATION451452    Dr. Oleka. Thank you, Mr. Chairman. Chairman Comer,453Chairman Sessions, and distinguished Members of the454Subcommittee, thank you for the opportunity to testify today.455My name is Dr. O.J. Oleka, and I serve as the Chief Executive456Officer of the State Financial Officers Foundation. SFOF is a457nonpartisan national network of 41 statewide elected financial458officers across 28 states who collectively oversee roughly $1.5459trillion in public assets. We equip these officers to promote460fiscally responsible policy and protect taxpayer dollars.461    I am also the son of Nigerian immigrants who came to this462country with nothing. Through hard work, faith, and the463opportunities that this great country provides, my parents464lived the American dream. That dream is why I have dedicated my465career to public service in ensuring that government works for466the people who pay for it and that American generosity is not467taken advantage of by fraudsters, foreign or domestic.468    In our inaugural oversight report released on February 27469of this year, we showed how state financial officers are470already saving taxpayers billions of dollars by stopping waste,471fraud, and abuse. Examples include Florida CFO Blaise Ingoglia,472who identified $1.86 billion in excessive local government473spending; North Carolina auditor Dave Boliek, who exposed over474$1.4 billion in lapsed salaries across 46 state agencies; and475Kentucky auditor Allison Ball, who you will hear from next, who476uncovered more than $836 million in wasted Medicaid payments;477and Utah auditor Tina Cannon, who uncovered nearly half a478billion dollars in inappropriate hospital payments.479    These are not isolated successes. State treasurers play a480critical role in stopping waste, fraud, and abuse before it481occurs. State auditors complement this work by exposing waste,482fraud, and abuse after the fact. Together, these elected483officials serve as the frontline guardians of public funds.484    Fraud and waste in Federal and state benefit programs are485not abstract problems. They drive up costs for American486families. New polling shows that 87 percent of voters express487concern about fraud or misuse of taxpayer dollars, and 83488percent say fraud contributes to higher taxes and rising costs489for families. Every dollar lost to fraud is a dollar that could490have gone to education or to infrastructure or tax relief.491Defrauding the American taxpayer has become a multi-billion-492dollar industry. It is a feature in our system, not a bug.493    Thankfully, President Trump's task force to eliminate494fraud, led by Vice President Vance, is fully committed to495ending the fraud industrial complex and restoring public trust496back in the government benefits system. SFOF and our 41 state497financial officers are fully committed to supporting Vice498President Vance and the Administration's initiative to root out499fraud. SFOF stands ready to serve as a resource.500    I would like to offer five specific recommendations that501can help the Vice President, the task force, and Congress be as502successful as possible.503    Number one, state financial officers routinely identify504fraud, waste, and abuse in federally funded programs505administered at the state level, but there is no formal506mechanism to share that information with Federal Inspectors507General. Amend the Inspector General Act to require every508Federal inspector general to establish standing liaisons with509state financial officers, mandatory data-sharing protocols, and510joint task forces.511    Number two, Federal benefit programs such as Medicaid,512SNAP, and unemployment insurance still rely heavily on self-513attestation, as was just mentioned, or periodic checks rather514than real-time verification of income, residency, and515citizenship status before payments are issued. Mandate truly516real-time nationwide cross-checking of income, residency, and517citizenship status before benefits are issued.518    Number three, Federal agencies are still catching most519fraud after payments have been made rather than preventing it520in real time, even though advanced tools already exist.521Accelerate adoption of modern fraud detection technologies522across all Federal benefit programs.523    Number four, many Federal benefit programs administered by524states continue to experience high rates of improper payments525and fraud despite existing Federal rules. Under the current526system, states receive full Federal matching funds regardless527of how effectively they verify eligibility, detect fraud, or528reduce waste. Expand performance-based funding across Federal529benefit programs administered by states to help resolve that530problem.531    And number five, taxpayers and elected officials currently532lack a single accessible real-time view of fraud, waste, and533improper payments across Federal programs. Create a single534real-time public dashboard so taxpayers can see exactly where535their money is going and how much is lost to fraud and waste.536    And in conclusion, Mr. Chairman, as a policy leader, as the537son of immigrants, and the father of three young children who538loves this country, I believe we have a moral and fiscal duty539to protect American taxpayers and their hard-earned dollars.540SFOF stands ready to support this Committee, this Congress, the541President, the Vice President, and the task force to eliminate542fraud and to defend our Nation's treasure, defeat corruption,543and deliver real results worthy of the American people's trust.544    Thank you, Mr. Chairman.545    Mr. Sessions. Dr. Oleka, thank you very much; very, very546nice.547    We next go to Auditor Ball. Welcome.548549                   STATEMENT OF ALLISON BALL550551                   AUDITOR OF PUBLIC ACCOUNTS552553                    COMMONWEALTH OF KENTUCKY554555    Ms. Ball. Thank you very much, Chairman Comer, Chairman556Sessions, Democratic and Republican Members of the557Subcommittee. It is an honor to be here today, and I thank you558very much for this invitation.559    The topic of waste, fraud, and abuse is not necessarily the560most pleasant one to discuss, but I hope to set a positive and561hopeful tone while speaking about this nonpartisan issue.562    In just a little over two years since I was elected as563State Auditor, my office has uncovered over $1 billion of564waste, fraud, and abuse within Kentucky's executive branch.565Fraud is obviously what makes the headlines, and I am more than566happy to talk about how we discovered fraud such as a state567employee's embezzlement of $400,000. But I also want to make568sure that we talk about the more prevalent, and I think569monetarily impactful, problem of waste. This is a problem that570my office encounters every day, but it is one that is easily571fixable. And because unfettered waste ultimately creates an572environment where fraud can flourish, we must do all we can to573combat both.574    In August 2023, my predecessor began a special examination575at the request of the Biden Administration's Health and Human576Services (HHS) Office of Inspector General (OIG), in577conjunction with three other states. When I took office, I saw578this examination through both under the Biden Administration579and the Trump Administration. This exam revealed that Kentucky580paid $836 million to managed care organizations for the same581Medicaid beneficiaries whose coverage was also being paid for582by another state.583    To be clear, this is definitively waste because one state's584payment to a Managed Care Organization (MCO) covers all585healthcare of all Medicaid recipients, so when two or more586states are paying MCOs for the same person, only the MCO, not587the Medicaid recipient, benefits.588    But that is not all we found. In conducting the last three589audits required by the Single Audit Act, we have revealed a590plethora of problems that show Kentucky is a target-rich591environment for waste, fraud, and abuse in the executive592branch. These problems include dead people remaining on593Kentucky Medicaid, multiple people using the same Social594Security number to obtain Medicaid, ineligible non-citizens595receiving Medicaid benefits. An executive branch data system596housing Kentucky's taxpayers' personal info was hacked in five597minutes during a security test. And Medicaid-funded long-term598care facilities, like nursing homes, in Kentucky were not being599inspected every 15 months as required by law, and some had not600received an inspection since 2019.601    And that is not all. My office of the Ombudsman Unit, which602reviews Kentucky's processing of SNAP, Medicaid, Medicare, and603TANF benefits, performs a variety of error reviews, one of them604being payment error reviews. In just one year, we have been605able to assist the Commonwealth in dropping its SNAP payment606error rates from 9.1 percent to 3.5 percent.607    But there is still more work to be done because Federal608rules for other programs have been more relaxed until the609passage of the One Big Beautiful Bill last year. Kentucky's610executive branch simply has not paid as much attention to the611other programs as it should. That is why Kentucky has a payment612error rate of 47.5 percent for Medicaid long-term care program,61328.5 percent for the Medicare Savings Program, 9.7 percent for614the TANF program, and 5.3 percent of the MAGI Medicaid program.615These error rates likely implicate hundreds of millions of616dollars in Federal funding.617    I could go on and on about waste, fraud, and abuse my618office has uncovered, but it is more productive to talk about619solutions. I recognize that auditors across the country are620structured differently. In Kentucky, I am an independent,621statewide elected official that is constitutionally separate622from every other office and branch of government, beholden to623no one but the people of Kentucky. In my view, it is crucial624for every state auditor to bring this mentality of independence625to their jobs.626    In doing so, state auditors must go beyond just doing627legally mandated audits. To do this, I have instructed my628office to complete a number of what we call special629examinations, like what we did to uncover the $836 million of630Medicaid waste. Special examinations are essentially631investigations that are not bound by traditional auditing rules632that can be too constraining to root out the problem of waste633in particular. As an example, the traditional auditing rule of634materiality sometimes allows wasteful expenditures that do not635have a material impact on an entity's finances to go636undetected.637    So, I have employed a multidisciplinary group of auditors,638lawyers, investigators, and analysts who understand how to639tackle waste, fraud, and abuse from every angle. And those640people need to be well-equipped. That is why my office has an641AI task force to determine how to implement the use of AI in642all the aspects of our work. AI can help us look at whole643populations of data versus traditional sampling methods in644auditing and will drastically cut down the amount of time it645takes to audit, allowing us to tackle more issues than ever646before.647    Another part of being well-equipped is having the right648data access. For the Medicaid capitation exam I discussed649earlier, HHS OIG gave us safeguarded special access to a650Federal data base, housing far better information than what651states normally have access to.652    And finally, the unfortunate reality is that some people653simply will not change their ways unless the harm they are654causing to their state is exposed. Congress is well-suited to655hold accountable the nefarious and incompetent state actors who656waste taxpayer money and defraud the American people. And like657today, state auditors' offices can assist Congress in doing so.658    This is a nonpartisan issue. If we take waste, fraud, and659abuse seriously, we can ensure that every family gets needed660assistance without breaking the backs of American taxpayers.661    Thank you very much for your time, and I am happy to answer662any questions the Subcommittee has.663    Mr. Sessions. Auditor Ball, thank you very much.664    Mr. Westbrooks, welcome to the Subcommittee today. The665gentleman is recognized.666667       STATEMENT OF ROBERT WESTBROOKS (MINORITY WITNESS)668669                   FORMER EXECUTIVE DIRECTOR670671           PANDEMIC RESPONSE ACCOUNTABILITY COMMITTEE672673    Mr. Westbrooks. Thank you, Mr. Chairman. Chairman Sessions,674Chairman Comer, distinguished Members, thank you for this675opportunity to testify today. My name is Bob Westbrooks. I676spent the last 30 years in public service investigating fraud677cases and auditing fraud controls. I am a retired Inspector678General and a former Executive Director of the PRAC.679    I authored the book titled Left Holding the Bag about the680pandemic fraud aid experience and the gaps in fraud prevention681and detection efforts and how we can be better prepared for the682next emergency crisis.683    I would like to highlight a few points from my written684testimony.685    Is there fraud in federally funded state-run programs?686Absolutely. Why? It is because it is where the money is. It is687relatively easy to steal, and fraudsters do not sufficiently688fear getting caught and punished.689    The prevalence of fraud and the underlying root cause vary690among programs. Is there too much fraud? Absolutely. But we do691not really know, in my view, the true amount of fraud--a true692amount of lost--the true amount that we have lost to fraud.693Whatever the amount, headlines involving large dollar loss694fraud cases erode public trust and can adversely impact those695in need.696    So, what do we know about this type of fraud? Government697benefit fraud, unfortunately, happens, and no program and no698state is immune. My written testimony contains data from the699U.S. Sentencing Commission and some illustrative cases. The700past few years have given us two prominent case studies, one,701of course, the $250 million Minnesota Feeding Our Future702Scheme, which has resulted in over 60 convictions; and two, the703$100 million Mississippi TANF scandal, which has resulted in704the conviction of the former Executive Director of the State705Department of Human Resources and others.706    Unfortunately, federally funded state-run programs, like707most Federal programs, are big, soft targets for individuals in708international fraud rings. The internet has reduced barriers to709fraud. Offenders can find free fraud tutorials online, can710purchase stolen identities for the price of a Happy Meal, and711can file claims from anywhere in the world. With automation712tools, they can simultaneously file multiple claims in multiple713states. The prevalence of fraud discussions online normalizes714this behavior, in my view, and reduces the fear of getting715caught and punished.716    So, what can we do to reduce fraud? It is as simple as717making it harder to steal. We can do that a couple of different718ways. I am a big supporter of the fact that we do not have all719the answers here, and sometimes, we can look at the720international community for some of the answers. And I am a big721fan of the U.K. Public Fraud Authority, which is a great model722that would need to be adopted in the United States, but in723terms of consolidating the best practices, guides, and724standardization of counter-fraud activities, not the725enforcement side, but counter-fraud activities, I think there726is a lot to be gained by looking at that model.727    We can also employ appropriate controls to deter fraudsters728from even attempting to file a fraudulent claim, prevent729fraudsters from consummating the claim, promptly detect those730claims that successfully pass, and then correct and respond to731fraudulent claims through prompt enforcement action, target732hardening, disruption, and recovery.733    There is no one-size-fits-all solution. Officials must734consider relevant risk factors and weigh program objectives and735the operating environment to design fit-for-purpose fraud736controls. To be frank, it is simply impossible or impracticable737to design a 100 percent fraud-proof program. The cost of738controls and the impact on the delivery of public benefits739would be too great. Whether you are running a mom-and-pop740store, Amazon, or a government program, fraud risk management741always involves very difficult tradeoff decisions.742    This is not to suggest in any way that we should tolerate743fraud. The American public should reasonably expect that public744moneys are not used to pay dead people, they are not used to745pay incarcerated individuals, or to pay duplicate claims in the746same state or across states, and that public funds are747otherwise appropriately safeguarded. Officials should748aggressively but responsibly adopt new technology tools in the749fight against fraud.750    Finally, safeguarding public money should be supported by a751coordinated and comprehensive risk-and data-driven approach,752leveraging our existing Inspector General structure and other753accountability partners to both reduce losses and restore754public trust.755    I look forward to your questions.756    Mr. Sessions. Mr. Westbrooks, thank you very much, very757interesting.758    I will move now to the young Chairman of the full759Committee, the gentleman, Mr. Comer, is recognized.760    Chairman Comer. Thank you, Mr. Chairman, for always having761good, substantive subcommittees here, always bipartisan. This762is a very important subject to this Committee--waste, fraud,763abuse, and mismanagement. I cannot think of a better panel.764    And I am going to start with our great Auditor in Kentucky,765Allison Ball. Auditor Ball, you have done a tremendous job766exposing waste and fraud in Kentucky. In your quest to767determine all of this Medicaid fraud, which I have been768screaming about for years in Kentucky--we support Medicaid in769Kentucky. You are from a poor Medicaid-dependent region in the770state, just like I am. We want to support the program, but771there is so much fraud and mismanagement, in my opinion, in the772Medicaid program in Kentucky, and we are just trying to get the773backs of the taxpayers. And your work has been phenomenal.774    Out of curiosity, has Governor Beshear worked with you any775during your audit? Were they helpful in turning over776information or anything to help come to the conclusions that777you came to with respect to the amount of fraud?778    Ms. Ball. That is a good question because I really do779believe these are nonpartisan issues, and we should be able to780work together. Unfortunately, I have to say, it has not been a781great system of cooperation. Boots-on-the-ground people have782been helpful. When it comes to rising levels of leadership, it783does get to be more difficult to get information from them, and784it is only--actually only gotten more difficult as time has785gone by. So, the unfortunate answer is no, it has actually been786disappointing that I have not had good cooperation from the top787level of the Beshear Administration.788    Chairman Comer. Do they dispute the findings? I know you789came out with this a few weeks ago. Has there been any790communication between the Beshear Administration and the791Auditor's office?792    Ms. Ball. So that is a good question. Their response was793mostly that it is not unique to Kentucky, that this happens in794other places as well, which in my view--and that is true, it795actually does happen in other places as well, but I think that796that attitude makes it less likely to be addressed. Just797because it happens somewhere else does not mean that it is not798serious and not important.799    Chairman Comer. And you are exactly right, and the Governor800is right. It is happening everywhere. We are trying to do801something about it. We are serious about it. Dr. Oleka802mentioned the task force that J.D. Vance will lead. We are803serious about trying to do something about this, and there is804just an attitude among a lot of politicians--and I am not going805to be partisan in here, Mr. Chairman, because you want this to806be a good bipartisan hearing, but there is just an attitude807among a lot of Governors and a lot of big city mayors that,808well, it is okay. It happens everywhere. It is no big deal. You809know, why do you care? It is just government money. It comes810down like manna from heaven. I mean, that is the attitude that811a lot of these officials have.812    So, I just want to publicly thank you for the work you are813doing. It is so essential. We have an independently elected814Auditor in Kentucky. Not every state does. I am glad that we815do. It has worked out well in this instance, and I hope that816the Kentucky General Assembly will take some of your findings817and work to reform Medicaid in Kentucky because I do not think818it is going to happen administratively, at least over the next819two years.820    So, my next question is to Dr. Oleka, my constituent, real821proud of the work that you do. Your organization, the State822Financial Officers Association, can play a huge role in823fighting fraud. Can you give us some examples of how your824organization can work with Congress to help not only identify825fraud but to try to hold people accountable for fraudulent826behavior?827    Dr. Oleka. Absolutely. Well, one of the things that we try828to do, Mr. Chairman, is provide good ideas for good public829policy. As a 501(c)(3), we provide educational resources. And830we think that if Congress is able to put some frameworks in831place where the state elected officials, again, Auditor Ball832and her colleagues, can effectively work directly with833inspectors general, work directly with these folks in the834Federal Government, you will see some real reforms.835    One of the things that is incredibly important, I think,836for a framework--and you touched on it--you need leaders who837have good policy information. They also need the statutory838authority. But they also need the political incentive or, in a839word, courage. You need good leadership. We have that840leadership, obviously, in Kentucky with Auditor Ball. We also841have it in other states as well, with Auditor Foley in842Nebraska, Auditor Cannon in Utah, and so many different places.843If you have got leaders like that, who are then able to work844with Congress directly, to work with the Inspectors General on845the executive side, then you can start to see some real846reforms.847    Also, if you have got a transparency website here at the848Federal level where the American people can see where their849taxpayer dollars are going, especially with fraud, that will850help.851    And one last thing, our financial officers actually have852trust among the people, so when they respond to these issues,853people listen to them.854    Chairman Comer. Well, thank you. Do not ever hesitate to855reach out to this Committee. We are serious about trying to856prevent fraud. We would love to claw back money. We would love857to hold people accountable. But at the end of the day, we have858got to reform programs and put more guardrails.859    When there are duplicate payments in Medicaid, when there860are people that have been deceased that are still, for some861reason, getting Medicaid benefits, or providers like we are862seeing in Los Angeles County with hospice are still billing863people that are no longer alive, that is a problem. And there864is just an attitude that is breathtaking to me among a lot of865government officials, they do not care.866    Well, some of us do care on this Committee, and I know you867all care, and we thank you for your great work. We look forward868to working with you in the future.869    Mr. Chairman, I yield back.870    Mr. Sessions. The gentleman yields back. Mr. Chairman,871thank you very much.872    For the record, I think that we need to make sure that we873support you. You have given Mr. Mfume and I an open hand, an874open opportunity with staff, with the opportunities to have875hearings, and we are trying to take full advantage of that. And876I believe that your words are matched by the effectiveness of877what Mr. Mfume and I are attempting to do, but----878    Chairman Comer. Thank you.879    Mr. Sessions [continuing]. We are going to have to move880more legislation. And I sent a note to Mr. Womack, our staff881director [sic], that is associated with me, and we have to find882a way to come together on bipartisan legislation. So, expect me883to be at your doorstep----884    Chairman Comer. Absolutely.885    Mr. Sessions [continuing]. With that also. And when we do886it together, I think that speaks volumes about matching what887has happened here.888    Chairman Comer. Absolutely.889    Mr. Sessions. Thank you very much.890    The gentlewoman, Ms. Norton, is recognized.891    Ms. Norton. Thank you.892    Millions of Americans rely on Social Security net programs893like the Supplemental Nutrition Assistance Program and894Medicare. We must ensure that these critical programs run895efficiently with minimal disruption. To that end, it is crucial896that agencies conduct their fraud prevention activities897efficiently so that funding and services can reach people898without unnecessary delays. Effective oversight requires highly899skilled personnel and adequate resources.900    Mr. Bagdoyan, what tools and resources do agencies need to901prevent unnecessarily delaying benefits?902    Mr. Bagdoyan. Thank you for your question, Ms. Norton. That903is a tricky proposition, to be frank. You have to thread the904needle on this. You cannot obviously delay important benefit905delivery, but on the other hand, you have to ensure a certain906amount of integrity in that delivery. So, technology is part of907the solution. Expedited reviews that fit within the delivery908timeline is important, access to vital data. I think as Dr.909Oleka mentioned earlier, it has to be done in real or near real910time to make sure that deceased individuals, incarcerated911individuals, and other ineligible individuals do not receive912that payment.913    But also, I would go back to a point I made earlier. It is914the culture, the acknowledgement, that fraud is a problem that915has to drive the response and make considerations of fairness916and speed of delivery versus the program integrity, fraud risk917management tradeoff. So that would be my high-level response to918your question. Thank you.919    Ms. Norton. Inspectors General are a key part of detecting920and preventing fraud. However, the Trump Administration has921fired 19 Inspectors General, robbing their offices of922leadership expertise and institutional knowledge. Mr.923Westbrooks, how do these firings harm people who need924government assistance the most?925    Mr. Westbrooks. Well, firings certainly have an impact on926the effectiveness of the Offices of Inspectors General. With927the absence of top-level leadership, you have instances where928there may be a lack of strategic direction or commitment to929oversee certain programs with the rigor that Congress and the930American people should expect.931    As probably more problematic in my view, just as932problematic or more than the firings, is actually the proposed933budget cuts, which are crippling. There was a study that was934put out, I believe yesterday, from the Partnership for Public935Service that the IGs on average are being asked to take a 13936percent budget cut over Fiscal Year 2024. GAO similarly was937facing some budget cuts.938    And when you look at the return on investment, I mean, they939are the best thing I think the government has got going. I know940I am biased in that regard, but I think on average IGs have941about an $18 to $1 return on investment. And I believe GAO has942in the nature of over $100--I think it is $120 per dollar spent943for those budgets. So, it is money well spent.944    So, we do need the leadership positions filled with the945right people that are independent in fact, in appearance, and946those offices need to be funded to do their job effectively.947Thank you.948    Ms. Norton. We must work together to ensure that Inspectors949General offices are not only fully staffed but also fully950funded. We cannot expect these offices to do the work we need951them to do when we do not give them the proper resources. I952hope my colleagues will join me in supporting full funding for953Inspectors General offices to ensure that Federal assistance954goes to those who need it most.955    And I yield back.956    Mr. Sessions. The gentlewoman yields back her time. Thank957you very much.958    The distinguished gentleman from Tennessee, Mr. Burchett,959is recognized.960    Mr. Burchett. Thank you, Mr. Chairman.961    It just seems to matter who is in charge. Everybody wants962to point the finger at the other side, but when they are in963charge, it just does not seem it is the same case.964    I always have said that if we could just eliminate the965fraud in these systems, that it would provide for the least966amongst us, more of us. And so, you know, I have been in--as967Mayor of Knox County and things, some things did not go right,968and I had to stand up and take the hit and admit to it. And I969am afraid that is kind of what is lacking all over the place up970here.971    And saying that, I want this to just go down the line. What972issues do the state and Federal agencies face in addressing973fraud risk in their program? And I guess I mean to say what974issues that stop them from addressing it? Start with you, sir.975How do you say your name?976    Mr. Bagdoyan. It is Bagdoyan, Mr. Burchett.977    Mr. Burchett. Well, you got my name right, so Bagdoyan. I978got yours right, too. There you go.979    Mr. Bagdoyan. Absolutely. Thank you.980    Mr. Burchett. That is a first----981    Mr. Bagdoyan. Thank you.982    Mr. Burchett [continuing]. For both of us, probably.983    Mr. Bagdoyan. Thank you.984    Mr. Burchett. Go ahead.985    Mr. Bagdoyan. I am glad we have that understanding. So, as986I mentioned, you know, the culture is very important, so that987drives whatever happens below. But it is essential to have a988robust fraud risk management capacity. You have to have the989leadership, you have to have the strategy, you have to have the990controls and execute those effectively.991    But at the Federal, state level, many times, as I mentioned992in my opening remarks, you have this issue of program design,993either statutory and/or regulatory restrictions on what a state994and a Federal Government can do, or a permissive attitude as995well, which allows extensive reliance on self-attestation,996which, as I described, is the bane of any auditor. So, that is997something that really needs to be looked at.998    I think you have a question, a follow-up.999    Mr. Burchett. Well, actually, I just go down the line and1000ask that, and then I will come back on my follow-up. But thank1001you for that.1002    Yes, sir.1003    Dr. Oleka. I might offer, actually, the same response.1004There is a challenge sometimes where state elected officials1005are not aware of all the resources available to them. For1006example, the Do Not Pay list, it is a great resource that has1007the Federal Government's support effectively outlining----1008    Mr. Burchett. What is the Do Not Pay--I know what it is,1009but I am sure the rest of the Committee does not.1010    Dr. Oleka [continuing]. It as a resource.1011    Mr. Burchett. That is a joke. I do not know what it is. Go1012ahead and tell me.1013    Dr. Oleka. Well, it is a resource that allows states--it is1014compiled by the Federal Government, and it is a resource that1015allows states to effectively look through folks that they1016should not give benefits to, that they can actually review it1017to make sure that there is no implication of fraud if you were1018to give some folks some resources. You can utilize that tool,1019and it can be expansive, based on the data that is given to it1020from states, so you pass data back and forth.1021    When you have got a policy response in that way, it1022increases, it makes more robust, the resources that are1023available. So, if state financial officers in particular had1024access and knowledge to that, that can help things, as well as1025the statutory authority. There is a Single Audit Act for1026Medicaid that effectively puts state financial officers,1027auditors in particular, in a position where they have got to1028audit Medicaid. If you had--once a year. If you had that for1029every program, then you are more likely to find fraud. So,1030those are some instances, as well.1031    Mr. Burchett. Ma'am?1032    Ms. Ball. So, I am going to piggyback a little bit on the1033culture issue because we found that on this $836 million of1034waste that we discovered--because when we started doing1035interviews with boots on the ground and then with leadership,1036we found out that people that were actually doing the work were1037told, hey, this is not that big of a deal, it is low priority.1038If you get to checking somebody's residency, you know, that is1039good, but it is really not that big of a deal. So, it really1040did expose that the attitude at the top really does make a1041difference.1042    I think that is why it is really important today that we1043are here because you are indicating to all the American people,1044hey, this really matters. And that has a cultural response and1045a cultural change. So, I would say the culture is important.1046    I also think that we need to be reviewing things at all1047levels. So, as we have started to get more aggressive on1048reviewing the error rates, those error rates have begun to go1049down. We saw that with SNAP. We went from 9.1 percent to 3.51050percent error rates just because we were actually involved in1051the process, and we were identifying particular errors. I think1052that has to be part of it.1053    And then another thing--actually, this piggybacks on what1054O.J. was just saying--the real-time review was a serious1055problem on this particular audit that we did because they were1056doing what was called Public Assistance Reporting Information1057System (PARIS) alerts--we were getting from the Federal1058Government from a program, but it only happened like once a1059quarter. So, it was not real time by any means whatsoever.1060People were also being told, hey, just ignore it for the most1061part. So, we need a greater level of access to as close to real1062time as we can get.1063    There is a program called Transformed Medicaid Statistical1064Information System (T-MSIS). We were able to use that in our1065audit. Normally, we cannot, but we were permitted to use it.1066HHS OIG gave us special access, and that gave us much closer to1067real time, and it was much fuller information. So, we were able1068to look and see, do they actually live in Kentucky or not? That1069kind of access is a gamechanger.1070    Mr. Burchett. Ma'am, thank you.1071    Mr. Chairman, I am out of time, but if I could yield, let1072Mr. Westbrooks say something. I saw him making some notes, and1073he is sort of got an orange tie on, and I am from Tennessee, so1074if I could let him just say something if that would be all1075right. Go ahead, brother.1076    Mr. Sessions. The gentleman is recognized.1077    Mr. Westbrooks. Well, thank you for that. A couple of1078comments from my experience in government, generally, and then1079during the pandemic emergency, is there are eligibility data1080bases that are out there, and it is very frustrating for1081anybody to say, why aren't we catching dead people,1082incarcerated individuals, et cetera, and duplicate payments?1083    So, food stamps or the SNAP program has the National1084Accuracy Center. You have--with unemployment insurance, there1085is an employment data hub. The problem is the 50 states and the1086different--and territories, they have got different information1087systems, so sometimes it is very challenging for them, for the1088data systems to talk to each other. They do not have the1089funding or the resources to connect in real time that we would1090like for them to have. So, that is one of the challenges is why1091these tools are not being fully implemented.1092    The other thing I would say is, you are--and I do not think1093this can be overstated--is the level of sophistication with1094international fraudsters and organized crime rings is a1095significant drain on states. I give an example in the pandemic,1096the one that sticks with me, my home state of Maryland,1097Governor Hogan announced in July of 2020, when--the heat of the1098pandemic when they were completing all these claims, there was1099an international fraud ring that had submitted 46,0001100fraudulent UI claims for $500 million. So, while the agency is1101busy making sure people have unemployment insurance to put food1102on the table, they are also getting hit by these very1103sophisticated fraud rings that they have to deal with as well.1104So, that is why I think we really need a much more coordinated1105approach.1106    Thank you.1107    Mr. Burchett. Real quick, are they mob-related or are they1108international terrorists?1109    Mr. Westbrooks. You have both. You have got state-1110sponsored----1111    Mr. Burchett. Oh, okay.1112    Mr. Westbrooks [continuing]. Bad actors----1113    Mr. Burchett. Thank you.1114    Mr. Westbrooks [continuing]. And you have got fraudsters,1115yep.1116    Mr. Burchett. Thank you, Mr. Chairman, for your indulgence.1117    Mr. Sessions. The gentleman----1118    Mr. Burchett. And my friends across the aisle, I appreciate1119you all's indulgence. Thank you all.1120    Mr. Sessions. Thank you very much, Chairman Burchett.1121    Ms. Randall, you are recognized.1122    Ms. Randall. Thank you, Mr. Chair, and thank you to our1123witnesses for being here today.1124    Combating fraud where it exists and ensuring proper1125stewardship of taxpayer funds is a shared responsibility1126amongst all elected officials at the state, local, and Federal1127level, and a responsibility I wish was shared by this1128Presidential Administration. I would like to quickly point out1129that the United States is currently spending $1 billion1130taxpayer dollars a day for a war in Iran that the President1131chose to start. Not to mention that Trump has personally1132profited $4 billion in his first year back in office through1133crypto schemes, shady property deals, and selling products like1134Trump Bibles and watches.1135    Some of my colleagues on the other side of the aisle and1136this Administration are quick to demonize so-called blue1137states, but it is important for the record to reflect that blue1138states like Washington are taking fraud issues incredibly1139seriously. For example, when it comes to Medicaid improper1140payments and potential fraud, Washington has moved from a1141reactive system to a proactive data-driven integrity model.1142    As a state senator, I voted to codify oversight1143expectations for the healthcare authority in their1144administration of Medicaid, and I also supported funding for1145Washington's fraud abuse detection system. This law, combined1146with elevating program integrity into a dedicated division,1147established focused leadership and accountability. And1148integrating audit and program integrity functions has led to a1149178 percent increase in fraud referrals and over $300 million1150recovered across two years.1151    Another example of the work Washington State is doing can1152be seen within the long-term services and supports programs,1153where the states recovered over 99 percent of improper1154payments. When it comes to childcare programs, of the over115563,000 families who received a subsidy in Washington, 2.61156percent of those families who were ultimately investigated, 131157individuals were prosecuted through the state's rigorous audit1158process. These are just a few examples of how Washington State,1159a blue state, is being very thorough and intentional in1160continuously improving and evolving their best practices to1161make sure that not only is fraud being addressed but that fraud1162is also being prevented. One example of 50, like some that we1163have heard here today, of how our states play such an important1164role in maintaining the integrity of taxpayer dollars.1165    What I want to make sure we are all very clear about,1166though, is that when there is an overpayment or an improper1167payment, that does not automatically equate to fraud. Mr.1168Westbrooks, is it fair to say that most improper payments are1169paperwork issues rather than fraud?1170    Mr. Westbrooks. It varies by program, but absolutely. That1171is the very challenging thing about when we use improper1172payment as the error rate is that includes overpayment and1173underpayment, and it includes situations where the claim was1174actually valid, but there is no documentation in the file.1175Fraud is a part of that.1176    And one of the things that frustrates me in the SNAP1177program in particular is where we are seeing a lot of the fraud1178is on the retailer side, retailer trafficking of fraud, and1179then stolen benefits. Neither of those are captured in the1180error rate that we have when we talk about improper payment.1181Improper payment is just a payment that on the surface,1182somebody looks at it, should not have been paid, or is in the1183improper amount.1184    Ms. Randall. Thank you, Mr. Westbrooks.1185    I have mentioned before in Committee that I had a sister1186with really complex disabilities who relied on Washington1187State's Medicaid program, and I can think of a number of times1188where my mom did not submit paperwork in time because Olivia1189was in the hospital or had another bout of pneumonia or had any1190number of health complications that meant that her stack of1191paperwork on the kitchen counter just got bigger and bigger and1192bigger. And those improper payments sometimes are just a1193struggling family trying to keep their kid or family member1194alive and healthy.1195    Mr. Westbrooks, it seems to me that one of the underlying1196premises of many of our hearings on fraud is that states are1197not incentivized to properly oversee federally funded programs.1198Given that states share in the cost of improper payments, what1199evidence suggests that states are not incentivized to oversee1200their programs?1201    Mr. Westbrooks. You know, I have not seen any evidence, and1202I cannot say that it does not exist. I will say, just frankly,120330 years in government in this business, I do not find many or1204any state, local, or Federal officials that do not seem to care1205about fraud. They seem to care about fraud. It is the fact that1206they do not have the tools available. And I think that the1207Federal--there are opportunities for the Federal Government to1208standardize and make these tools available, whether it is1209making sure that data systems talk to each other or just1210providing guidance and enhancing the general workforce and1211skillset of counter-fraud professionals across government,1212state and Federal.1213    Ms. Randall. Absolutely.1214    Thank you so much, Mr. Chairman. I yield back.1215    Mr. Sessions. The gentlewoman yields back her time. I just1216might make a note that the gentlewoman very appropriately has1217her substance as she chooses to speak, but we are trying to1218address today Federal and state programs not related to any1219political section necessarily, that we believe that this is a1220nationwide problem, that we believe this is not a blue versus1221red state, but rather things that we can accomplish by working1222together, and so I want to thank the gentlewoman, who has a1223strong record of not only working for that benefit, but today,1224once again, we are highlighting some successes that can be made1225by states that they have in contact.1226    Ms. Randall. We should learn lessons wherever we can.1227    Mr. Sessions. And we will continue to do that, and I thank1228the gentlewoman very much. I now would yield to the1229distinguished gentlewoman, the Chairwoman of the Rules1230Committee, Ms. Foxx.1231    Ms. Foxx. Thank you very much, Mr. Chairman.1232    Mr. Bagdoyan--am I saying that? Bagdoyan, got it. Bagdoyan,1233got it, sorry. One of the biggest problems with federally1234funded programs funded by the taxpayers, run by the states,1235lack of incentives for states to be good stewards of taxpayers'1236hard-earned money, and I am building on comments that have been1237made already. It is all too easy, I think, for states to treat1238the Federal Government as a piggybank that pays for the lion's1239share of programs which allow states to tolerate a much higher1240amount of fraud than if their own money was at stake. And I1241think this applies to government agencies as well as the1242individuals involved. It is wrong. These programs are all1243funded by the same taxpayers.1244    Here we are on tax day, and we are reminded that nobody1245gets to choose to pay taxes to their state or their Federal1246Government. The same taxpayers must forfeit their pay to both1247levels of government. There is no ``Federal'' money or1248``state'' money, but rather taxpayer money. Therefore, all1249levels of government have the same obligation to be good1250stewards of taxpayers' money.1251    So, what prevents state agencies from implementing stronger1252guardrails for detecting and preventing fraud in programs that1253receive Federal funds such as eligibility and identity checks?1254What kinds of checks could state agencies implement quickly to1255help verify eligibility and identify as part of these programs?1256    Mr. Bagdoyan. Thank you for your question. So, the response1257is multifold. I think I will keep going back to the culture of1258accountability, which drives everything else. You can have very1259elegant fraud risk management systems, but if you do not have1260the leadership to make that happen, nothing is going to work.1261So, that is an important thing.1262    The other one which was manifested during the pandemic is1263unemployment insurance, where states were just overwhelmed, I1264think as one of my fellow witnesses mentioned, with massive1265claims for benefits. They did not have the systems, they did1266not have the expertise, they did not have the data to respond1267to that onslaught. But what happened, unfortunately after much1268of the benefits were dispensed, the Federal Government provided1269funding as well as expertise, called Tiger Teams from the1270Department of Labor that helped stem some of the more egregious1271problems, including the self-attestation issue that I mentioned1272earlier. So, that showed success during the pandemic, but I do1273not think it is being sustained at this present time.1274    Ms. Foxx. But we could have had, in the law, you could not1275self-attest. We could have put that into legislationc----1276    Mr. Bagdoyan. Right.1277    Ms. Foxx [continuing]. That you could not do that, correct?1278    Mr. Bagdoyan. You can, but it has to be verified.1279    Ms. Foxx. Right.1280    Mr. Bagdoyan. That is where states fell short. You know----1281    Ms. Foxx. Right.1282    Mr. Bagdoyan [continuing]. I attested myself as being1283eligible for unemployment insurance. I signed my name, but, you1284know, who is going to verify that? And then data analytics is1285very important, real-time data analytics, but you also have to1286respond to the results of those data analytics.1287    Ms. Foxx. Thank you.1288    Ms. Ball, you talked about the culture, and I think that is1289a very important issue. I do think there is a culture of, well,1290it does not matter. So, how can we do more here to prevent the1291improper payments from being made in the first place without1292the Federal Government having to take all the responsibility1293for making sure that this happens?1294    Ms. Ball. So, that is a great question. I really do think1295there is a partnership element with somebody at the Federal1296level and then somebody at the state level. So, I like to use1297my example because I think it has worked pretty well. I have1298myself as State Auditor. I am responsible to the people of1299Kentucky. I am independent, and I am very interested in1300accountability, transparency, and exposure. So, that kind of1301exposure, that impacts the culture. I think that people that1302were working on this were embarrassed to find out that suddenly1303it is reported. There were actually comments made, this is not1304a high priority, it is a low priority. You know, if you get to1305it, great, but it is really not something we are that1306interested in. And once the public becomes aware of that, then1307there is a desire and incentive for a cultural change.1308    So, I really do think there has got to be somebody at the1309state level who is keeping an eye on these things, who is1310incentivized to do that. I think auditors work well for that.1311We have an ombudsman as part of our office, and I think that1312has really added a lot to us because we are checking error1313rates all the time, and we check what type of error rate it is.1314So, I would think it would be a partnership like that.1315    Ms. Foxx. One quick question, excuse me, Mr. Chairman.1316North Carolina has an independently elected auditor. How many1317states have independently elected auditors who should be held1318accountable and can be held accountable?1319    Ms. Ball. That is a great question. I know not every state1320has elected auditors or somebody who functions like that. It is1321actually probably more a question that Dr. Oleka would be more1322well-versed to answer than me. I know kind of here and there1323who is. He might know the full body if you want to do it that1324way.1325    Ms. Foxx. Do you mind, Mr. Chairman?1326    Mr. Sessions. The gentlemen is recognized. This is why we1327are here, and the gentlewoman is actually moving in on a very1328important subject, so the gentleman is recognized.1329    Ms. Foxx. Thank you.1330    Dr. Oleka. Thank you for the opportunity to answer that1331question. It is a tricky question in the sense of the names1332have different titles. You could have a comptroller in Texas,1333which is extremely powerful, but does not have the title of1334auditor.1335    What we have seen in terms of our 41 state financial1336officers across 28 states, we have got roughly a dozen or so1337that are auditors. Probably a little less than half than that1338have the type of authority that Auditor Ball has, that Auditor1339Boliek has in his state. Pennsylvania has a strong auditor in1340Auditor General DeFoor. Utah Auditor Tina Cannon is very strong1341in that regard. So, there are a few. One of the things that1342could make this issue a little bit better is if you had1343stronger auditors, as you just pointed out.1344    I also quickly want to touch on the culture issue that you1345mentioned because while people say this is not a big deal,1346obviously this body knows, this auditor knows. Let me tell you1347why this is such a big deal in terms of the American people.1348When you have a culture that defers to fraud and allows it to1349stand, then you spend more money. When you spend more money,1350that then mandates, based on your political philosophy, an1351increase in taxes. So, if you increase taxes on hardworking1352families, now they are faced with the choice of putting gas in1353their car, paying for diapers for their children. This is a1354real cost that families have to go through, all because fraud1355was not detected.1356    And it also sows distrust because you have people who are1357trying to survive on Special Supplemental Nutrition Program for1358Women, Infants and Children (WIC) or Supplemental Nutrition1359Assistance Program (SNAP) or government benefits, and they look1360to their left and they see one of their neighbors who is a1361fraudster riding around in a Benz buying as much food as they1362can.1363    So, when you do not have a culture of accountability, when1364you do not have the type of leadership that Auditor Ball and1365her colleagues across the country have, you sow distrust, you1366have discord in the public, and you also have a culture of tax1367increases, which takes money out of the hands of the American1368people.1369    Ms. Foxx. Thank you.1370    Thank you, Mr. Chairman.1371    Mr. Sessions. The gentlewoman yields back her time. Thank1372you very much.1373    The gentleman, Mr. Walkinshaw.1374    Mr. Walkinshaw. Thank you, Mr. Chairman, and thank you for1375your indulgence again in allowing me to join the Subcommittee.1376And thank you to our witnesses.1377    Mr. Bagdoyan, the GAO testimony includes five principles of1378fraud. Probably all four of you are familiar with this from the1379International Public Sector Fraud Forum's Guide to Managing1380Fraud for Public Bodies, really wonderful five principles1381there. I would add a sixth that I think the Chairman has1382demonstrated today. A fraud prevention effort has to be1383apolitical and nonpartisan if it is going to get the kind of1384buy-in necessary to succeed.1385    And Dr. Oleka, I really appreciate you and your1386organization and your commitment to this work, your commitment1387to working on the Vice President's initiative, which I1388sincerely hope is successful in accomplishing its stated goal.1389    I do think we have to just speak the truth here and say1390that the President of the United States in describing that1391initiative--this is a direct quote--said it would ``focus1392primarily in blue states.'' And I think that would violate the1393principles of everything that we are discussing here. I hope1394that is not the direction that it goes.1395    Auditor Ball, you made a very powerful comment. You said1396that it is crucial for every state auditor to bring their1397mentality of independence. And you probably would agree that if1398Governor Beshear were here today, he maybe would have a1399slightly different response to the question that Chairman Comer1400gave about his work. And that is okay, that is good. You are1401independent, you have your own perspective. He cannot fire you1402if you say something that he does not like.1403    I want to just reiterate concerns that some of my1404colleagues have shared about the diminution of the independence1405of our Federal IGs. And one aspect of that, that has not been1406specifically addressed, is with the mass firing of 17 of them,1407many have been replaced by acting IGs who do not have the same1408statutory protections that those fired IGs have. Three-1409quarters, three-quarters of the Federal IG positions are vacant1410today, so the very people who are helping to do this work. Mr.1411Westbrooks has laid out the savings are not on the job anymore.1412And we have talked about the budget. Just the HHS IG is facing1413in the President's budget a potential $13.7 million cut.1414    My concern, Auditor Ball, is if those kind of cuts to the1415HHS IG and others are put into effect, the next time a state1416auditor like yourself wants to partner with the HHS IG to1417identify and reduce $800 million of fraud in Kentucky, they1418will not have the capacity or the resources to partner with you1419or one of your colleagues around the country.1420    Mr. Westbrooks, based on your experience as a Federal IG,1421what kind of operational impact would it have if you were told1422that your office was going to face a 12 percent budget cut in1423one year? What would you have to do? What would you have to1424scale back in terms of your work to prevent fraud?1425    Mr. Westbrooks. As an immediate impact, the immediate1426impact on your audit operations are on prospective engagements.1427You have to look at what you are going to be able to audit in1428the future in the short term. On ongoing engagements, now you1429have to rescope--potentially and most likely rescope those1430audits because you are not going to have the staffing or1431resources to do the field work that you need to do. You know,1432our Federal audits, particularly the big agencies, you are1433doing field work around the country. It is not--they are not1434desk audits.1435    And then the really difficult thing and the challenging1436thing is when you have this disruption in the community, you1437have very experienced OIG auditors that are leaving government,1438and so the brain drain from what we have experienced in the1439last year, it is very hard to overstate. Some of the most1440experienced auditors that I have worked with are no longer with1441us but had still plenty of years left in Federal service that1442they should still be in the job, but now they are in the1443private sector.1444    Mr. Walkinshaw. Thank you.1445    And Mr. Chairman, this morning, I sent a letter to Cheryl1446Mason, who is the relatively new, I think, Chair of the Council1447of the Inspectors General on Integrity and Efficiency (CIGIE),1448asking for clarity on how these vacancies, firings, and budget1449constraints on the IG community are affecting our ability to1450prevent and detect fraud, waste, and abuse. And without1451objection, I would like to submit that letter for the record.1452    Mr. Sessions. Without objection.1453    Mr. Walkinshaw. Thank you, Mr. Chairman. If you will1454indulge me, it is just me and you, I wanted to just ask Mr.1455Bagdoyan one question. Your testimony noted the many1456recommendations GAO has made. I think you said that maybe 401457percent are open. Forty percent of 215 recommendations you all1458have made to Federal agencies are not open. One of those--or1459maybe this is, maybe a number of them are in this category--1460that an agency designate an entity to lead fraud risk1461management. You cite that as a recommendation. Maybe that is a1462recurring recommendation.1463    Mr. Bagdoyan. It is.1464    Mr. Walkinshaw. I think that would surprise most Members of1465Congress that an agency does not have an entity designated to1466lead fraud risk management. I mean, if the Secretary of HHS1467were here and we asked them that question, would they say, no,1468we do not have any entity that leads fraud risk management?1469    Mr. Bagdoyan. Yes. Well, for HHS, they do have the Center1470for Program Integrity. But again, fraud risk management is a1471huge agency. It is rather dispersed. But yes, that is a very1472important thing to have in place. Dedicated entity, that1473implies dedicated to fraud risk management. What we do find1474often is that that responsibility is devolved to existing units1475based on as other duties as assigned. They do not have1476necessarily the expertise, the bandwidth to do true fraud risk1477management. And that is apparent when, I mentioned earlier in1478my remarks, that the capacity to manage fraud risks is on the1479softer side, and that means you do not have the right controls1480in place. And that, in part, might explain, might explain why1481some of these agencies are still lagging in implementing our1482recommendations. So, I hope that----1483    Mr. Walkinshaw. Thank you.1484    Mr. Bagdoyan [continuing]. Is responsive to your question.1485    Mr. Walkinshaw. Thank you. Thank you, Mr. Chairman.1486    Mr. Sessions. The gentleman yields back his time. I am1487going to yield to myself now.1488    I want to thank each of you for being here. Yesterday, we1489received a rather in-depth and robust opportunity to allow you1490to speak. And I have thought about this overnight and have1491obviously a number of questions that we do want to make sure we1492approach by asking questions and getting answers and moving to1493that. And I do accept the responsibility that primarily this1494falls on Mr. Mfume and myself to make sure that we talk with1495each other, that we look at things.1496    But it is a robust, robust marketplace of ideas of things1497we do not do. And I think that perhaps we tend to think that we1498inhibit ourselves based upon either the law or common courtesy.1499And a prime example is perhaps how we identify people. The1500Internal Revenue Service has a heck of a time knowing who they1501are talking to, who they are going to meet with. And of course,1502you and I do not have to agree, but I think that we have ways1503to identify people, biometrics, our eyes, our fingerprints.1504    Look, we have got a lot of other things to get into, but1505Mr. Westbrooks, tell me about leading-edge techniques and some1506pushback or your view as an auditor about utilizing technology1507as opposed to just data that is gleaned from a sheet of paper1508or personal information.1509    Mr. Westbrooks. Yes, on identity verification, there are a1510lot of tools out there. And it is not my personal view but my1511experience in the community was there is a lot of public1512debate. There are some privacy issues related to that where1513things that might be common sense, people object to. You know,1514and some European countries have a national digital ID card,1515which would go a long way if we had a similar concept here in1516the United States It would go a long way to reducing identity1517fraud, but that was just ``dead on arrival'' for whatever1518reason beyond my comprehension.1519    The other thing it is important to note is, you know, these1520international fraud rings utilize AI and other tools, and they1521can afford to make mistakes, right? The government has less1522opportunity. There is less forgiveness if the government1523aggressively utilizes AI and makes mistakes and people's1524benefits get cutoff. And there was a big scandal in the1525Netherlands related to this where they very aggressively used1526this algorithm and many, many, many people were cutoff from1527benefits. Some included--committed suicide as a result of it.1528    So, you know, we talk about ethical or responsible use of1529these tools. Unfortunately, I think that is the reality. I1530think government may always be a step behind the fraudsters who1531can afford to make mistakes. It does not cost them anything.1532    Mr. Sessions. Well, let us see where we end on that.1533Perhaps, Auditor Ball, you can get closer to this. One of the1534things I learned from you yesterday is I asked the question,1535how do you find a lot of these problems? And you said,1536whistleblowers. People call us. No one likes to see that,1537whether they are sitting in a room with other people or that1538they see things that happen, that they want these things to1539happen where fraud would be involved. But we just vetted out1540and heard maybe some European models might be something good to1541look at.1542    What is wrong with requiring or having a data base where1543you have to present your finger? And I know we have talked1544about this with voting. And that is where we get into the1545states are responsible for that. But Federal benefits, we have1546got a robust amount of data with fingerprints. What would that1547seemingly do to this issue?1548    Ms. Ball. So, honestly, I have to say, it is not something1549that I have analyzed very deeply. So that is kind of a brave1550new world looking at that kind of information. And from a1551personal perspective, I get a little bit nervous about1552presenting biometric information to a database, and it is1553housed somewhere and the kind of security issues that you have.1554But it does not----1555    Mr. Sessions. Well, you go to the airport.1556    Ms. Ball. That is true. That is true.1557    Mr. Sessions. You go to the airport, and they take your1558picture. And it is true that they agree then not to keep that1559picture.1560    Ms. Ball. Right.1561    Mr. Sessions. But it presented itself as a way to identify1562yourself. And I think we have got to--I am asking the1563questions, wanting you to give the answer, but you ought to1564present evidence who you are----1565    Ms. Ball. Right. You do need----1566    Mr. Sessions [continuing]. That is certifiable before you1567gain these benefits, not show up and self-report.1568    Ms. Ball. Right. I do think there needs to be a secure,1569reliable identification process. What that is at this point, I1570do not necessarily have the answer. There are so many1571technological advances that are occurring rapidly right now.1572And there are confidentiality and security issues that kind of1573coexist with those type of situations.1574    I will say for us in our experience, it is not always1575proving that somebody is who they say they are that is the1576problem. It is other kinds of breakdowns. So, my focus has been1577on the problems of, well, we know this person is dead, but they1578are still listed as eligible and issues like that. So, I would1579say you are correct, that is part of the problem, but my focus1580has been on a lot of other problems, duplicative payments for1581one person, issues like that. And I would say those may be the1582greater issues of concern right now rather than someone1583pretending to be somebody that they are not.1584    Mr. Sessions. Well, we have got to certainly go back and1585cobble together the information we have got. All four of you, I1586could just ask a question. I am not trying to get you to jam1587into all the answers at the same time, but the PRAC, the PRAC1588has a billion, 700 million pieces of data that is not1589indicative that--it is broad, but it is indicative that you1590need to ask or gain more information. You need to know that1591this is--the term red flag may or may not be appropriate, but1592an indication, please go look at this. And that should be an1593indication perhaps where we would start with wandering into the1594world. Do we know who you are? Do you need to come and present1595yourself?1596    And I have just gone through Social Security issues, and1597they vetted me to make sure they knew who I was. It would have1598been nice if they had said, please come in Waco, Texas, to the1599Social Security office, but not everybody likes that. And there1600is a line between what is required and what is requested. I1601just think we have got to get closer to understanding. So, talk1602to me about the use of PRAC data and information as this helps1603itself to get closer.1604    Mr. Westbrooks?1605    Mr. Westbrooks. Yes, thank you for that question. So, the1606PRAC has an enormous amount of data, as does the Treasury's Do1607Not Pay or Payment Integrity Center. The way the system is1608structured, though, the states would really connect with1609Treasury's Do Not Pay to do--that is where the connection point1610should be, where you would check eligibility against the1611various data bases.1612    I think the PRAC needs to be and is working toward being1613closer aligned with Do Not Pay and the Department of Treasury1614so it is not a pay-and-chase after the fact. It is on a much1615more real-time basis. But I do think it is critical that we1616have that centralized government data system.1617    The other thing I will say related to this, and it is1618something you should be thinking about is as bad of a job as we1619do in preventing fraud, I submit to you, we do just as bad of a1620job in protecting information. You know, my, like probably many1621people in this room and many Federal employees, you know, my1622top-secret security clearance information was all stolen by a1623hostile nation-state, and I was on, you know, credit check1624monitoring for several years, paid for by the government. So,1625that is one of the things that we need to look at when we1626balance this idea of centralized repositories for1627identification is who is going to be holding it and how secure1628is it? Because it can do irreparable harm.1629    That is why we are seeing these international--what are the1630repercussions? These bad--these international fraud rings are1631literally buying personal information for the cost of a Happy1632Meal on the dark web because of these hacking of government1633systems. So, that is the thing that concerns me as much as1634fraud is the information of personal--protection of personal1635information. Thank you.1636    Mr. Sessions. I agree. Mr. Bagdoyan?1637    Mr. Bagdoyan. Yes, I would echo much of what Mr. Westbrooks1638said. There are a lot of datasets out there that can be1639crunched to yield results. We look for indicators of potential1640fraud. That is how GAO does its data analytics. But once we1641present our findings to agencies, we expect them to respond to1642the results. And many of them, unfortunately, do not do that,1643so that is a huge problem.1644    And I will use one example from the VA's Community Care1645program where there are a lot of providers from outside the VA1646who tend to veterans' health needs. And we flagged several1647thousands of them several years ago that posed problems based1648on their background. They were convicted of fraud. They were1649convicted of patient neglect and abuse, things that would be1650disqualifying. We made the referral to the VA, and they1651promptly lost the referral. So, when we followed up with them,1652they had never heard of the referral, so they had not done1653anything with it. So, that is a huge problem.1654    Mr. Sessions. You act like we are busy. I would now yield1655to the gentleman, Mr. Walkinshaw, who is requesting this1656opportunity. The gentleman is recognized.1657    Mr. Walkinshaw. Thank you, Mr. Chairman.1658    Mr. Westbrooks, I want to just ask you to go back to your1659PRAC experience. And I apologize for asking a question that1660perhaps is answered in your book. I will have to get a copy of1661it. You know, talk to us about, from your perspective, the1662future of PRAC. Do we still need PRAC? The pandemic is over.1663What role did PRAC's relative independence, being constituted1664of IGs, hosted by CIGIE, play in its success? Is it important1665that that independence continue if we should continue PRAC?1666Just give us your answers to those questions or thoughts on1667those, please.1668    Mr. Westbrooks. Thank you for your question. When the PRAC1669was created, it was created--you know, the pandemic hit, and in1670a very--in a matter of a couple of days, the Senate drafted a1671bill which included the CARES Act, which included the PRAC1672provisions. They took the PRAC provisions from the Recovery Act1673and just dropped it into the bill. So, there are a lot of1674lessons learned from the experiences that I had from April 27,16752020, when I first got appointed, through December 2022. If you1676look at the CARES Act, there are a lot of things, lessons1677learned on how we can improve.1678    It is absolutely critical that we have got a centralized1679repository for government information that has the authorities,1680legal authorities, to share that data with state and local1681partners. I think that was the secret sauce that we had with1682the PRAC was we could aggressively use our legal authorities to1683share with state and locals and Federal law enforcement1684partners data without entering into complex data sharing,1685matching agreements. So, it is critical that there be this1686repository, that they have the appropriate legal authorities,1687that they have the independence to do their work, they are1688appropriately funded, they are tied to Treasury's Do Not Pay1689system, they do not operate independently. That is not much1690government value to me. And I think those are the keys for1691success.1692    I do not know--this is my personal opinion. I am retired1693from government so, and I can speak freely on it, but I do not1694know to what extent they--it needs independent investigative1695and audit authority. I think the analytic data center of1696excellence authority is a prominent role. But unfortunately, it1697is the investigative authorities that give you the special1698legal rights to share data with your law enforcement partners,1699so there needs to be some smart lawyering and legislative1700counsel thinking on how to write the law on that. But I do1701think it is critical that there be a center of excellence that1702can share not just with the Feds, but with the state and1703locals. And it would be somewhere where the state and locals1704feel like they are--or GAO feels like referrals are going to be1705taken seriously and not lost in a file somewhere. Thank you.1706    Mr. Walkinshaw. Thank you. I want to just shift gears to IT1707systems and IT modernization. And Mr. Bagdoyan, your testimony1708highlights some of the challenges states face, especially with1709respect to UI programs being implemented by legacy IT systems1710or outdated IT systems. And I am curious, Auditor Ball, I mean,1711is that something you have experienced in Kentucky where maybe1712you say there is fraud in this program and we need X, Y, and Z1713controls, and you talk to the IT folks and they say, sorry, we1714have a legacy system that just cannot do it. Have you1715experienced that?1716    Ms. Ball. That is definitely an aspect that we deal with.1717We actually have a division that deals with IT audits, so we1718look to see all the time, this legacy software program that you1719have available, is it up to speed? Does it do the work we need1720it to do? Actually, lately, what we have seen breakdowns,1721though, has been when they have been eliminating a legacy1722program and incorporating a new one, it is the switch that has1723created the opportunities for breakdowns. And we actually just1724saw this with our Department of Revenue. We have had just all1725sorts of problems with bringing on a new program on every1726level, so that is its own problem.1727    Mr. Walkinshaw. Okay. Great. And then for Mr. Bagdoyan,1728what is it that the Federal Government or Congress can do to1729better incentivize or support states who are trying to get1730their IT systems in a position where they can do fraud1731prevention in the way it needs to be done?1732    Mr. Bagdoyan. Yes, thanks for your question, Mr.1733Walkinshaw. Again, going back to the UI experience, we1734designated that out of cycle as a high-risk area in the midst1735of the pandemic, in large part driven by data and technology1736issues, among others like service delivery and so forth. And1737what worked during that time was that the Federal Government1738provided funding and expertise to, among other things, states'1739technology system upgrades, which relatedly eventually caught1740up with the integrity issues and helped mitigate them. But as I1741mentioned, by the time that happened, most of the money had1742already been dispersed. So, something like that is--should1743warrant close consideration so that, you know, the states can1744have skin in the game but also have some Federal support to1745make things happen.1746    Mr. Walkinshaw. Thank you. Dr. Oleka, anything? I apologize1747for going over my time, but you are literally itching to jump1748in on this question, I can tell there.1749    Dr. Oleka. Well, just to echo what Auditor Ball was saying1750in particular, I think there is an opportunity for states to1751utilize the new technologies that you were talking about as1752well to make sure that they have all the tools and the1753resources that they need.1754    One of the things that the Chairman was mentioning in terms1755of potential new technologies, I would offer if you have a1756stronger, deeper relationship between state leaders, the state1757treasurers and auditors in particular, treasurers obviously on1758the front end in terms of verification, eligibility,1759transparency of how money is being spent, and the auditors on1760the back end with regard to investigation, examination, and1761obviously audits, then I think you can see a lot of that1762cooperation.1763    Also, I wanted to respond earlier mentioning that you hope1764that the Vice President's task force is successful, and of1765course, so do I. I was able to meet with some of that1766leadership last week. Now, again, it was not an in-depth1767conversation. I do not want to certainly suggest that there was1768more discussed than there was, but I can say that that team is1769very serious, very focused on these types of conversations. How1770do we get better with technology? How do we get better with1771cooperation and partnerships between the state and the Federal1772level? And it was not from a partisan perspective. So there, I1773think, is a great deal of opportunity here from this Committee,1774state leaders, and also this task force led by the Vice1775President to get really good, serious, systemic change done on1776the fraud issue.1777    Mr. Walkinshaw. Thank you.1778    Mr. Sessions. He yields back. Before he leaves, I would1779like to, if I can, do a follow-up to what the gentleman was1780asking because I think it is a valid point.1781    So, Mr. Westbrooks, probably I would ask this. We began1782discussing a little bit more in depth PRAC. We discussed a1783little bit more in depth about its existence, its seemingly1784integration into the law and how it has become effective. Do we1785want to keep PRAC? Do we want to expand its knowledge and use1786it and to make sure it is still ready to go, maybe made1787permanent?1788    Mr. Westbrooks. Thank you for your question, Chairman1789Sessions. And this is the central premise of my book, quite1790honestly, was the frustrations in the early days of the1791pandemic to reinvent the Recovery Board's data analytics1792capability. You cannot just flip a switch and create something.1793It needs to be on standby. It may not need to be as big as it1794was during the pandemic, but it was incredibly, incredibly1795challenging to get the, hey--it is called the PACE, the1796Pandemic Analytics Center of Excellence--and unbelievably1797challenging to get that stood up in a very short period of1798time. So, I would hate to see that capacity gone because there1799will be--not only will there be another emergency crisis that1800we will deal with, but just on normal operations, you need that1801capacity. We want that capacity. And it is a relatively low1802cost for it. Thank you.1803    Mr. Sessions. Well, I think the main point I would say is1804it exists, day one. And the last part, which I am not here to1805shill for, but I have a piece of legislation that I am dropping1806today that makes it permanent. So, thank you very much for1807amplifying that. And of course, we need to pass it out to1808Members of this Subcommittee also.1809    I will yield back my time now, go to this distinguished1810gentleman from Florida, the gentleman, Mr. Frost.1811    Mr. Frost. Thank you very much, Mr. Chairman.1812    In the Fiscal Year 2024, over $10 billion of Federal1813Government spending on SNAP was lost due to improper payments.1814The One Big Beautiful Bill Act included a SNAP provision that1815is nicknamed the Alaska carveout. This was a political move1816that was made to get the One Big Beautiful Bill passed over on1817the Senate. The Alaska carveout delays the cost-sharing1818requirement for states with high improper payment rates, like1819my state, the State of Florida. It makes absolutely no sense.1820Essentially, it penalizes the states that make good-faith1821efforts to improve integrity and reduce their errors, and it1822rewards the worst-performing states in the entire nation.1823    We are already seeing people take advantage of this1824loophole. In Maryland, a whistleblower claimed that senior1825officials were trying to leave correctable errors uncorrected1826to keep the error rates up. It also kicked the problem for the1827worst-performing states down the line by creating a two year1828delay. And this is important to me because I am from the State1829of Florida, which has some of the highest rates of improper1830payments on SNAP in the entire nation.1831    Mr. Westbrooks, how does the Alaska carveout discourage1832low-performing states with high improper payments, like my1833State of Florida, from making the necessary improvements and1834actually fixing the problems?1835    Mr. Westbrooks. Thank you for your question. I cannot speak1836specifically for Florida officials and what any state official1837might be thinking. You know, I would look at it from an audit1838perspective. I would look at the effectiveness of any1839intervention. When we are talking about penalties and1840incentives, are they closely tied to the behavior to drive the1841desired results?1842    Just on a personal level, I am a proud father of five, and1843it strikes me as giving my D student, dinging their allowance,1844my D student, but then letting my F student pass and say--just1845with a finger wag to say, well, next year, I am going to cut1846your allowance. So, in terms of the tie, direct tie to the1847behavior, I think that is going to be a challenge. And I look1848forward to auditors, GAO, and other officials looking at how1849effective that carveout is in practice in reducing fraud, which1850is the ultimate goal.1851    Mr. Frost. Yes. I doubt it is going to be effective. I1852mean, it was not a move made to fix anything. It was a1853political move. It was, you know, pretty reported on. We all1854knew about it when it was going on the Senate. You know, my1855state, our Governor, Governor DeSantis, has allowed the program1856to essentially crash and burn. I mean, the Florida payment1857error is over 15 percent. It is unacceptable. And because of1858carveouts like the Alaska carveout, states like Florida are1859getting rewarded for running a horrible program. There is no1860reason to believe that even with a delay, that states like mine1861can get their act together and finally turn things around. And1862this is important because it really impacts working families1863and the commitment we have made to them.1864    Mr. Westbrooks, do you have any indication that states that1865are receiving this carveout are actually moving toward1866compliance? Is there any indication of that?1867    Mr. Westbrooks. No, I cannot speak to that. No, I have not1868seen anything on that. Thank you.1869    Mr. Frost. And how do high error rates impact Floridians1870and just Americans in general who depend on the vital programs?1871    Mr. Westbrooks. Well, as you know, in the Act, depending on1872the level of the error rates, there is a certain percentage of1873cost sharing that has shifted. I guess some of the criticism1874that I have seen of it is that, you know, you are relying on an1875error rate that includes overpayments and underpayments and1876includes what we talked about earlier about documentation1877errors. So, there is a cost implication or a penalty associated1878with a, one could argue, an imperfect measurement. It is the1879best that we have, right? It is--the improper payment rates,1880error rates, is the best measure that we have, but when you tie1881it directly to financial penalties in a different timeframe, I1882think that is where some of the debate has been on whether it1883will be effective or not. Thank you.1884    Mr. Frost. What do these errors mean for, like, a working1885family? I mean, I think we can all understand what, like, an1886underpayment can mean for a family. What does an overpayment1887mean for somebody?1888    Mr. Westbrooks. Well, an overpayment just means that the1889state made an error in the calculation, and so they overpaid.1890And the way the SNAP program--data quality program works, if1891the error is under, I think it is $58, then it is deemed as not1892material, so it is not factored in. So that--so, you might have1893instances where there are a large number of under $58 errors,1894overpayment or underpayment, but there is a systemic issue1895underneath that that will never be addressed because it does1896not meet the error.1897    But, you know, all of the error rates ultimately, like I1898said, affects--as you know, affects the state cost share1899amount. And any time that there are, this is any government1900program, whenever there are penalties associated with anything,1901you always have to worry as an auditor that people are going to1902game the system in terms of their statistics. And that is1903always going to be a risk, and data quality is always going to1904be a risk in that program and I think any other Federal1905program. Thank you.1906    Mr. Frost. Thank you. I yield back.1907    Mr. Sessions. The gentleman yields back his time.1908    You have given us not only a laundry list, but I think some1909good direction that we need to go. I am interested in making1910sure that I follow up with each of you on not just your ideas1911but that I provide you feedback about how we are getting there.1912    We cannot fix this without each of you, auditors who see1913things and direction we go, but I think that you see some sense1914of opportunity that lies within the Members here that are truly1915concerned about over and underpayments. Perhaps an underpayment1916is very difficult for us always to quantify. I am not sure we1917pay as much attention to those, even though our congressional1918offices have to fight many times with people who want to be1919recipients on those matters. We can consume ourselves if we do1920not fix this problem. We can take away from the availability of1921money, and we see that when we look at the national debt.1922    This chance that we have, however, I think, Dr. Oleka,1923needs to be brought front and center to people who are like1924you, who are auditors, who then openly express their delight or1925their problems with what we are doing.1926    I am very much interested, and Mr. Mfume and I in this1927Subcommittee, getting closer to this, but we have to start with1928more than just looking at the PRAC or looking at making1929legislation permanent to save it. And I think Mr. Westbrooks'1930point that I took under advisement that I wholly agree with is,1931why would we do away with the data we have? Why would we not1932move forward on that?1933    But I think the question is--and we have vetted that here.1934This staff and I have spent a great deal of time of wondering1935what is that key word? Is it fraud that we need to focus on1936that says because of a question of fraud--not fraud, but a1937question of fraud--will that allow us to receive information1938across the board and other agencies to where they could do1939business with each other, where they could verify things? And I1940think it is our hope that weakens my last question to you1941today.1942    I think if we were to ask a question, not assuming we know1943the answer, us asking a question, would that mean that the1944entities, no matter Small Business Administration (SBA),1945Department of Veterans Affairs (VA), wherever it is, they could1946then go and vet that question a little bit better and ask for1947data to certify who people are? Is that really the answer to1948where we would ask people and take the 15 minutes and vet them1949and then have the tools to where we could go and double check1950what they said, death certificate, voter registration, license1951information? There is a lot of information that is out there1952that they should have access to, even if it is to their own1953state. Help lead me down that pathway, anyone.1954    Mr. Westbrooks?1955    Mr. Westbrooks. I can share my experience as IG of the1956Pension Benefit Guarantee Corporation. We had--and it is a very1957imperfect analogy and model, but with Death Master File data,1958you have currently existing matching capabilities, right? And1959you want to build a system because that data is very imperfect,1960right? So, you build the system so that if there is a match of1961two or three elements, I think our agreement with them was,1962they are two elements match, that is a flag. You cannot take1963action unilaterally on a flag. The flag has to be adjudicated1964and resolved, but it is at least a flag.1965    What you do not want are agencies taking action. And this1966is sometimes--I think folks act too precipitously if they have1967not been working fraud cases. A flag is just a flag, and there1968are many, many, many false positives, many false positives,1969so--but you want to system and build an environment where the1970flags are identified very quickly and adjudicated very quickly.1971You do not want, you know, an adverse impact on a claimant, but1972you do not want to get into a pay-and-chase situation. So, that1973is how it worked with the Death Master File data. It cannot1974just be one--you know, a misspelling on, you know, you did not1975put the ``s'' on the end of my last name. It has got to match1976two elements. Then you adjudicate.1977    Mr. Sessions. I think you make my point very eloquently,1978and this is the point that whether you are going on veteran's1979benefits, whether you are taking out an SBA loan, whether you1980are going in Social Security, the mistake that if it is not1981vetted properly up front over long term becomes a huge issue.1982    Auditor Ball?1983    Ms. Ball. Absolutely, there needs to be a thorough and1984accurate vetting process. I do not know that it means that you1985have 15 minutes with each person who reaches out to you because1986a lot of times what we find is, it is a red flag, it is a1987notification, it is an alert, that then gets ignored. When we1988start to dig into our systems, a lot of times we actually know1989someone has passed away, they are a deceased person because it1990says it in their file, but it also says that they are eligible.1991So, I think a lot of it really does boil down to making sure1992that you are acting on red flags. There is a good system in1993place for what you are supposed to do when there is a red flag.1994It really is having those controls and then following through1995on those controls.1996    Mr. Sessions. Is there a timeframe associated with that? Is1997there a limitation associated with that? Is there one red flag1998does not indicate something, but it might indicate a question,1999and you keep going? Certainly, someone who is committing fraud2000has multiple failures across questions and challenges that2001would be asked----2002    Ms. Ball. Right. Sometimes----2003    Mr. Sessions [continuing]. Correct?2004    Ms. Ball [continuing]. That is the case where there are2005multiple red flags, and sometimes they are not acted upon. So,2006I think you need to have very, very clear guidelines and2007controls to ensure that you are treating those things seriously2008and you are doing the things in the timeframe that you are2009supposed to do them.2010    Mr. Sessions. Do we need to help with that and say these2011need to be cleared?2012    Ms. Ball. That is a good question. I think the work that we2013have done is starting to highlight the breakdowns, and it is2014going to be good to see in the next year and the year after2015that, okay, we have highlighted the problems at the state2016level. Are they fixing them? I do not know that it needs to be2017spelled out at a greater level at the Federal level. In some2018instances it may. Sometimes it just needs to be the oversight2019on the front end to just make sure they are actually doing it.2020    Mr. Sessions. Yes, because I can envision circumstances2021where multiple failures were recognized and someone gave up on2022it thinking maybe they had pushed too hard. We generally expect2023someone, when challenged, to go, whoops, I got caught. I do not2024think that happens. I think that there is a continuation of2025this. Dr. Oleka?2026    Dr. Oleka. Yes, I think what the Auditor is saying is2027exactly correct. There is obviously a belief in federalism, I2028think, among this crowd. Allow the states to figure out what2029would make the most sense in terms of a lot of the controls,2030and then potentially what could happen is that you and your2031colleagues set a baseline. And I will give you an example. In2032Mississippi, Treasurer David McCrae, he was able to figure out2033an issue regarding citizenship for unclaimed property.2034Unclaimed property is a financial asset that you can give back2035to the people if they have lost it. A lot of treasurers have2036that authority. So, he was able to put in some guardrails to2037effectively make sure that there was not a lot of fraud based2038on citizenship. So, he was able to do that.2039    Now, you couple that with a lot of the new technologies2040that we have been discussing, it becomes iterative. So then2041when you have continued types of fraud, if it is verification2042or eligibility, now, because of technology, you can actually2043batch different queries where if the red flag, as you were2044mentioning, is a set of issues that regards to paperwork, you2045are able to answer those in a lot different ways if it is a2046couple of red flags that it results to very clear out and2047outright fraud.2048    So, based on what Auditor Ball and her colleagues are able2049to do within their states, then again working in a continual2050relationship with the Federal Government, the necessary2051partners, you can figure out a lot of that stuff without having2052to mandate it. Some things, obviously, though, it needs to be a2053clear, compelling mechanism, but I think that is where the2054conversation can go back and forth to figure out what that2055ought to be.2056    Mr. Sessions. And we ought to drive that to a conversation2057of common sense.2058    Mr. Bagdoyan?2059    Mr. Bagdoyan. Yes, thank you, Mr. Chairman. I would agree2060with all the comments that we just heard. Data analytics is at2061the heart of this. You have to look for those red flags. And as2062I kept saying throughout my presence here today, you have to2063act on the results. Back in December of last year, we issued an2064interim report on our review of the Affordable Care Act, the2065Federal exchange. We flagged--the most egregious flag was a2066single Social Security number that had 127 ACA policies2067associated with it. When we presented that example to the2068Centers for Medicare and Medicaid Services (CMS) for an2069explanation, they told us that they did not perform that sort2070of analytics. They were surprised by the result, but they were2071not planning on doing anything about it because they were2072concerned about kicking the wrong person off that policy.2073    So, you know, that is a pretty significant example of a2074massive red flag that, at least for now, that particular agency2075is not going to take any action on. You have to act on those2076red flags. You cannot say, oh, it is a red flag. Well, okay,2077but, you know, we are good with it. And that is the temperament2078that has to change.2079    Mr. Sessions. I know you are right because I, early in my2080career, had an opportunity to have people who collected money,2081offered service, and if you did not give them the available2082answers, they quit vetting things. It is no different than a2083police officer that arrests a criminal and the judge lets them2084out by the time the nighttime shift is done and they see them2085back on the street. There have to be ways that are common2086sense, cost effective, reasonable to where people can2087understand the system and the outcomes. But it does mean that I2088and this Subcommittee have to do our job.2089    And I found out yesterday--Mr. Westbrooks, I did not have a2090chance to meet with you yesterday, but I did the other three2091witnesses that are here today. I found out that they have2092placed a great deal of confidence that we can make progress and2093work together.2094    I asked Dr. Oleka a question yesterday and again this2095morning about the follow-up, about how we are going to come and2096actually engage on this issue properly. And certainly, we2097recognize the Vice President is engaging, walking in this2098shadow also of making sure that what we do is bipartisan, is2099not political, is driven by data that can be sustained. And2100this is where we are moving.2101    So, I want to thank each of you for taking time not just to2102get on a flight and come here but to take your very important2103time away from the duties that you have that help save this2104country the embarrassment of systems that are frail or do not2105work properly. I look forward to touching base with each of you2106on future activities and how we can best work together.2107    So, with that and without objection, all Members have five2108legislative days within to submit materials and additional2109written questions for witnesses, which will be forwarded to the2110witnesses.2111    If there is no further business, without objection, this2112Subcommittee is now adjourned.2113    [Whereupon, at 11:58 a.m., the Subcommittee was adjourned.]21142115                          [all]