Objective 5.2: Sustain strong financial stewardship of HHS resources to foster prudent use of resources, accountability, and public trust

HHS supports strategies to sustain strong financial stewardship of resources.  The Department continues to strengthen the financial management environment to prevent and mitigate deficiencies.  HHS is focused on upholding accountability, transparency, and financial stewardship of HHS resources to ensure program integrity, effective internal controls, and payment accuracy.  The Department is also building an enhanced financial management workforce that is better able to keep pace with changing contexts.

Objectives represent the changes, outcomes and impact the HHS Strategic Plan is trying to achieve.  This objective is informed by data and evidence, including the information below.

  • Managing the Business of Government to Build Back Better is a priority for the President’s Management Agenda.  Federal agencies are using financial management systems to track the financial risks that the climate crisis poses to the American economy, and aim to lead by example by appropriately prioritizing federal investments and conducting prudent fiscal management.  Agencies also are working to deliver more equitable results in financial assistance and acquisition programs, including by centering considerations of equity within program integrity.  This priority is supported by two strategies: Foster lasting improvements in the federal acquisition system to strengthen the U.S. domestic manufacturing base, support American workers, lead by example toward sustainable climate solutions, and create opportunities for underserved communities; and Build capacity in federal financial management and through federal financial assistance to catalyze American industrial strategy, address climate-related risks, and deliver equitable results.  (Source: The President's Management Agenda)
  • As of September 30, 2021, the Department obligated $2.4 trillion against its $2.7 trillion in budgetary resources and outlayed $2.2 trillion in FY 2021.  (Source: USA Spending Agency Profile: Department of Health and Human Services)  HHS is the largest grantmaking and second largest contracting agency in the federal government.  In fiscal year (FY) 2020, HHS awarded $244.7 billion in grants (excluding CMS grants) and $160.7 billion in contracts (inclusive of contracts awarded by other federal agencies on behalf of HHS.  HHS programs accounted for 38 percent ($140 billion) of total U.S. prescription drug expenditures in 2019.  (Source: 2021 Top Management and Performance Challenges Facing HHS)
  • The Provider Relief Fund supports American families, workers, and healthcare providers in the battle against the COVID-19 outbreak.  HHS is distributing $178 billion to hospitals and healthcare providers on the front lines of the coronavirus response.  (Source: Provider Relief Fund)
  • As the single largest cabinet agency by spending, representing approximately one-fourth of the total federal budget, HHS maintained its reputation for excellence in budgetary and financial practices.  For the 23rd consecutive year, HHS obtained an unmodified (clean) opinion on the Consolidated Balance Sheets, Statements of Net Cost, Statement of Changes in Net Position, and the Combined Statement of Budgetary Resources.  (Source: HHS Agency Financial Report FY 2021)
  • HHS Office of Inspector General's Report identified the financial integrity of HHS programs as a top challenge.  Whether HHS is paying for medical services, prescription drugs, or human service programs, managing what the Department pays and recognizing and remedying problematic payment policies are critical to controlling costs.  Reducing improper payments—such as payments to ineligible recipients or duplicate payments—is critical to safeguarding federal funds.  Fraud, waste, and abuse divert needed program resources to inappropriate, unauthorized, or illegal purposes.  HHS must ensure the completeness, accuracy, and timeliness of financial and program information provided to other entities both internal and external to the federal government.  (Source: 2021 Top Management and Performance Challenges Facing HHS)
  • In 2020, the Medicare program is estimated to have spent $861.9 billion to provide healthcare services for approximately 63 million elderly and disabled beneficiaries.  This represents approximately 13 percent of federal spending, and spending is expected to increase significantly over the next 10 years.  Due to its size, complexity, and susceptibility to mismanagement and improper payments, the U.S. Government Accountability Office first designated Medicare as a high-risk program in 1990.  Medicare also faces a significant risk with improper payments—payments that either were made in an incorrect amount or should not have been made at all—which reached an estimated $43 billion in fiscal year 2020.  (Source: GAO High Risk Area: Medicare Program & Improper Payments)  Other High priority HHS programs include the Child Care and Development Fund, the Children's Health Insurance Program, and Medicaid.  (Source: High-Priority Programs)
  • For FY 2021, HHS conducted 38 improper payment risk assessments.  Of these, HHS identified three programs as potentially susceptible to significant improper payments—(1) Head Start; (2) COVID-19 Claims Reimbursement to Health Care Providers and Facilities for Testing, Treatment and Vaccine Administration for the Uninsured Program (Uninsured Program); and (3) Provider Relief Fund General and Targeted Payments.  (Source: HHS Agency Financial Report FY 2021)
  • The 2021 Medicare Fee-For-Service estimated improper payment rate (claims processed July 1, 2019 to June 30, 2020) is 6.26 percent—an historic low.  This is the fifth consecutive year the Medicare FFS improper payment rate has been below the 10 percent threshold for compliance established in the Payment Integrity Information Act of 2019.  (Source: Biden-Harris Administration Announces Medicare Fee-For-Service Estimated Improper Payments Decline by Over $20 Billion Since 2014)
  • CMS has developed a number of preventive and detective measures for specific service areas with high improper payment rates, which include Skilled Nursing Facility, hospital outpatient, Inpatient Rehabilitation Facility, and home health claims.  CMS believes implementing targeted corrective actions will continue to prevent and reduce improper payments in these areas and reduce the overall improper payment rate.  (Source: FY 2022 Annual Performance Plan and Report - Goal 5 Objective 1)

Contributing OpDivs and StaffDivs

All OpDivs and StaffDivs contribute to achievement of this objective.

HHS OpDivs and StaffDivs engage and work with a broad range of partners and stakeholders to implement the strategies and achieve this Objective.  They include: the Chief Acquisition Officers Council (CAOC), Chief Financial Officers Council (CFOC), Healthcare Fraud Prevention Partnership, National Business Office Committee (NBOC), and Shared Services Governance Board (SSGB).


Continue to strengthen the financial management environment to prevent and mitigate deficiencies

  • Leverage artificial intelligence and robotic process automation to improve quality and timeliness of key financial management business processes.
  • Engage quality improvement principles to review key business processes and identify opportunities to manage risk and improve outcomes in areas such as financial management, grants management, and acquisitions.
  • Build structures to continue transforming financial processes from manual to digital for faster, more accurate workflows at all levels of the organization.
  • Facilitate continued collaboration across public and private sectors to adopt and advance nationally supported standards, implementation specifications, and certification criteria.
  • Support the integrated business intelligence framework to provide complete, accurate, and timely information to stakeholders in real time. 
  • Promote the application of financial management policies and procedures to include best practices across HHS to ensure sound internal controls.

Uphold accountability, transparency, and financial stewardship of HHS resources to ensure program integrity, effective internal controls, and payment accuracy 

  • Implement governance structures to provide accurate and timely financial information that demonstrates HHS accountability to stakeholders and facilitates data-driven operational, budget, and policy decisions that enhance equity for all.
  • Strengthen program integrity methods to better prevent fraud and reduce improper payments by maintaining and improving oversight programs related to early detection and prevention.
  • Invest in technical assistance, capacity-building, and burden reduction to strengthen program outcomes while ensuring program integrity, fiscal discipline, including helping grant recipients improve financial acumen, enterprise risk management, internal controls, and efficient operating policies and procedures to promote equitable access to financial assistance funding, while preventing fraud, waste, and abuse.
  • Focus and prioritize audits (such as grantee single audits, Department financial audit, Office of the Inspector General and Government Accountability Office programmatic audits) to increase accountability of HHS programs.
  • Define standards of excellence for the HHS financial community and implement a framework for measuring and monitoring success.
  • Collaborate across HHS and the private sector to align health information technology investments and advance consensus-based standards, implementation specifications, and health information technology certification criteria to improve interoperability of systems and the access, exchange, and use of electronic health information.

Build an enhanced financial management workforce able to keep pace with changing contexts 

  • Address financial management workforce infrastructure to focus on adaptations to new technologies and skill requirements, recruitment, and retention.
  • Develop training strategies for financial management that improve the transfer of knowledge and sharing of best practices and process across HHS.
  • Support financial analysis knowledge management by promoting an accessible repository of financial resources, directives, instructive documents, and standard operating procedures from across HHS.
  • Strengthen communities of practice for the federal financial management workforce to improve capability, recruitment, retention, and succession planning across the enterprise.

Performance Goals

The HHS Annual Performance Plan provides information on the Department’s measures of progress towards achieving the goals and objectives described in the HHS Strategic Plan for FY 2022–2026.  Below are the related performance measures for this Objective.

  • Decrease improper payments in the title IV-E foster care program by lowering the national error rate
  • Increase the cost-effectiveness ratio (total dollars collected per $1 of expenditures)
  • Reduce the Percentage of Improper Payments Made under Medicare Part C, the Medicare Advantage
  • Reduce the Percentage of Improper Payments Made Under the Part D Prescription Drug Program
  • Reduce the Improper Payment Rate in the Medicare Fee-for- Service (FFS) Program
  • Reduce the Improper Payment Rate in the Medicaid Program
  • Reduce the Improper Payment Rate in the Children's Health Insurance (CHIP)

Learn More About HHS Work in this Objective

  • HHS Agency Financial Report Fiscal Year 2021: Provides fiscal and summary performance results that enable the President, Congress, and the American people to assess our accomplishments for the reporting period October 1, 2020, through September 30, 2021.  This report provides an overview of HHS programs, accomplishments, challenges, and management’s accountability for the resources entrusted to the Department.
  • HHS FY 2021 Payment Integrity Report: lists the Department’s risk-susceptible programs, phases of assessments, identifies root causes and mitigation strategies, summarizes proper, improper and unknown payments for HHS’s risk susceptible programs, and provides program specific reporting information for Medicare, Medicaid, Children’s Health Insurance Program, Temporary Assistance for Needy Families, Foster Care, Child Care and Development Fund, Head Start Disaster Relief, and CDC Disaster Relief.
  • Improper Payments Measurement Programs: For programs deemed susceptible to significant improper payments, CMS must obtain a statistically valid estimate of the annual amount of improper payments, implement a plan to reduce improper payments, and report annually in the Agency Financial Report (AFR).
  • Public Assistance Reporting Information System (PARIS): an information exchange system designed by ACF to provide State Public Assistance Agencies (SPAAs) with client data as a result of state and federal computer matching.  The resulting matches are used by participating SPAAs to validate client reported circumstances and identify possible candidates for erroneous payments.

Content created by Assistant Secretary for Planning and Evaluation (ASPE)
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