GAO urges federal agencies to do more to stop at least $180B of improper payments made in error

Federal agencies paid out an estimated $186 billion by mistake in fiscal year 2025 alone and without better oversight, taxpayers could keep losing money at that level, according to a new report from the Government Accountability Office. Since 2003, these payment mistakes have added up to about $3 trillion, touching everything from Medicare and Medicaid to unemployment benefits and tax credits.

The watchdog agency described the issue as a “long-standing, significant problem” and said several departments repeatedly failed to comply with federal reporting requirements designed to track and reduce payment errors.

GAO noted that many improper payments are not necessarily fraud, but instead stem from insufficient documentation, eligibility verification failures, duplicate payments or administrative mistakes.

Weak oversight systems

Still, officials warned that weak oversight systems leave federal programs vulnerable to both waste and fraud if longstanding deficiencies are not fixed. The report explained that improper payments “can include overpayments, underpayments, and payments where an agency is unable to determine whether a payment was proper because of insufficient or lack of documentation.”

The report identified seven federal agencies with programs that posted improper payment rates above 10% for multiple consecutive years between 2021 and 2024.

Five of those agencies, including the Departments of Labor, Education, Health and Human Services, Treasury and Agriculture, lacked sufficient internal procedures to secure timely reporting and monitoring of payment integrity problems. GAO said those agencies did not always provide “complete and timely information” as required under federal law.

Healthcare spending gets the lion's share

Programs involving healthcare spending continue to account for most of the government’s improper payment totals. Medicaid alone has remained on GAO’s high-risk list for years because of persistent documentation and eligibility problems that contribute to billions of dollars of improper payments annually.

GAO officials argued that agencies must move past simply identifying improper payments and begin implementing stronger prevention systems.

Among the steps recommended in the report are improved tracking procedures, tighter monitoring requirements, clearer reporting guidance from the Office of Management and Budget, expanded corrective action plans and faster implementation of watchdog recommendations.

“It is critical that agencies take actions to implement IG and GAO recommendations to help reduce improper payments and save taxpayer dollars,” the report read.

The watchdog said in the report that agencies “may continue to miss opportunities to improve payment integrity and reduce improper payments” if their outstanding recommendations are ignored.

The report emphasized that Congress cannot properly oversee federal spending if agencies fail to submit complete and timely data about improper payment issues.

GAO: "Stronger oversight is needed"

GAO warned that unless OMB updates its guidance and explicitly directs agencies to provide required reports, lawmakers could continue to lack “key payment integrity information needed to assess agencies’ actions to reduce improper payments and hold them accountable.”

The report further stressed that stronger oversight is needed to “improve clarity and liability over agencies’ efforts.”

The watchdog agency presented several concrete reforms that agencies should adopt to reduce payment errors, such as finding the "root causes of improper payments," establishing deadlines for corrective actions, measuring whether reforms are working and conducting ongoing audits to validate payment accuracy.

The watchdog concluded that “much more needs to be done” to stop billions in avoidable payment errors across the federal government.