Key points:

• • • Efficiency & cost savings 鈥擠OGE aims to enhance the efficiency of federal government operations and achieve cost savings by identifying and addressing instances of waste, fraud, and abuse.

    • Modernization & technology 鈥� DOGE employs advanced technologies and software solutions to improve the operations of federal government agencies, which it says will help in auditing benefits and streamlining processes.

    • Impact on government agencies 鈥� DOGE’s initiatives may lead to the restructuring of various federal agencies, including potential adjustments to their operational scope and staffing levels.听

The relationship between citizens and their government, both on a federal and state, level involves a basic transaction that underpins modern democratic governance: taxes for services. Citizens contribute a portion of their income, and in return, the government provides essential services, such as infrastructure like roads, access to public safety agencies (for example, police, fire, and emergency medical services), and social safety nets.

Yet today, the evolving relationship between citizens and their government has sparked innovative approaches to efficiency and accountability in public administration. The activities of the Trump administration鈥檚 Department of Government Efficiency (DOGE), both at federal and state levels, represents a bold experiment in restructuring how government delivers services while managing taxpayer resources.

As the government’s responsibilities extend beyond fundamental functions, its need for revenue likewise increases. The expansion of services necessitates higher taxes to support them, resulting in a complex balance between public provision and private contribution that characterizes our social contract. In the United States, the government employs various departments and a bureaucratic system to deliver essential services to all US citizens.

From a political perspective, there are individuals who prioritize higher taxes in exchange for improved social services, while others advocate for reduced taxes regardless of the consequences. This raises the critical issue of finding a balance between these two positions. And for some, the solution lies paradoxically in expanding governmental oversight with the objective of limiting its own scope. The US is facing such an impasse at the changing of the guard from the Biden administration to the second Trump administration.

It may be useful to examine how this latest efficiency focus, on both a federal and state level, is playing out as DOGE continues to have a heavy impact on how government services are paid for and allocated.

Federal DOGE

At the federal level, DOGE, although not an official government department, was established under the on January 20, by President Trump. It was created with the objective of enhancing efficiency within the federal government through the implementation of advanced technologies and modernization of operations. Its primary responsibilities encompass improving governmental processes and evaluating the possibilities for restructuring or consolidating federal agencies.

The establishment and implementation of DOGE involves differing opinions as there are individuals responsible for both the fiscal adjustments and the tax changes. Not surprisingly, there have been both positive and negative political reactions to DOGE鈥檚 actions; and depending on the political perspective, the scales can tip in either direction.

There are several key aspects of what DOGE is trying to accomplish as well as the impact it鈥檚 already having, including:

Focus on efficiency & cost savings 鈥� DOGE’s primary stated objective is to enhance the efficiency of federal government operations and achieve cost savings. This goal is pursued by identifying and addressing instances of waste, fraud, and abuse, thereby leading to a more effective utilization of taxpayer resources. This can be accomplished by reviewing each agency and its personnel with an emphasis on what is necessary to operate optimally at the lowest possible cost, resulting ideally in a reduction of tax dollar expenditures.

Modernization & technology 鈥� DOGE employs technology and software solutions to improve the operations of federal government agencies and increase overall efficiency. These technologies serve dual purposes: auditing the benefits delivered and streamlining the processes that administer these benefits.

Potential impact on agencies 鈥� DOGE has been involved in initiatives that may lead to the restructuring of various federal agencies, including potential adjustments to their operational scope or staffing levels.

Data privacy concerns 鈥� Discussions have arisen regarding data privacy, specifically concerning DOGE’s access to and use of sensitive government information, especially around its interactions with agencies such as the Social Security Administration.

Several changes proposed by DOGE were implemented promptly. However, many of these changes require legislative approval and are still progressing through the necessary channels. At the end of May, Elon Musk concluded his tenure as the leader of DOGE. This transition created an opportunity for a comprehensive evaluation of the impacts of his leadership, which should take into account both the reduction in the number of federal employees and the overall budgetary implications. It is important to note that this assessment pertains solely to the federal implementation of DOGE.

State DOGE

In addition to the federal DOGE, individual states have also tried their hand at creating more efficient government process by utilizing a DOGE-like model. The implementation and evolution of this type of DOGE activity are ongoing and vary by state. Indeed, the concept of DOGE at the state level has rapidly evolved, with changes occurring on nearly a daily basis, making it challenging to keep up with the latest developments. States such as Florida, Iowa, New Hampshire, Oklahoma, Kansas, Missouri, Wisconsin, Texas, North Carolina, North Dakota, Kentucky, Mississippi, New Jersey, and South Carolina听have all either implemented or are in the process of establishing a DOGE-like system.

These states have kicked off their DOGE efforts through various establishment processes, such as by executive orders from the governor’s office or by legislative initiatives that are working their way through the state legislatures or executive branches in several states. Meanwhile, other states have created online portals, established by the state legislature, for residents to report fraud, waste, and abuse.

One critical consideration for any DOGE created by a state is an understanding of its ultimate purpose. This is particularly relevant given that all US states, except for Vermont, are mandated to balance their budgets annually. Such an effort at balancing the budget would seem to render DOGE or a similar entity somewhat unnecessary. Consequently, this complicates the justification for its implementation.

Where will DOGE take us?

Within the upcoming months and years, the final decision regarding the necessity of DOGE will come into focus. Based on budgetary considerations, an evaluation will ascertain whether DOGE is essential or redundant. And if deemed necessary, governments then will have to decide whether DOGE should be implemented as a federal or state program.

In the evolving landscape of government efficiency initiatives like DOGE, we witness the tangible manifestation of the fundamental citizen-state relationship being renegotiated. The tension between providing adequate services and maintaining reasonable tax burdens continues to shape political discourse across federal and state levels. As these experimental approaches to government efficiency unfold, their success will ultimately be measured not just by cost savings, but by how well they preserve the social contract while adapting to modern challenges.

Indeed, the coming months will reveal whether DOGE represents a sustainable innovation in governance or merely another chapter in the ongoing struggle to balance public needs with fiscal responsibility 鈥� a question that lies at the heart of American democracy itself.

You can find out more about the challenges government agencies face here

In 2024, the federal government was rated as the between the oil and gas and pharmaceutical industries.

As he is about to begin his second term, President-elect Donald Trump and advisors including Elon Musk have promised sweeping changes to the way the federal government works 鈥� changes, not surprisingly, that will focus on how various agencies operate. Musk has been teamed with former Republican presidential candidate and pharmaceutical entrepreneur Vivek Ramaswamy to lead the (DOGE), a commission aimed at reducing federal spending by $2 trillion annually and decreasing the workforce of federal agencies by 75%.

As state and local governments anticipate the ripple effect of changes at the federal level, this mirrors historic efforts under the Reagan and Clinton Presidential Administrations to deliver greater government efficiency 鈥� to a much larger and potentially more impactful degree, of course.

鈥淒raining the swamp鈥�: A Reagan-era rallying cry revisited

While many credit President Trump with popularizing the rallying cry to 鈥渄rain the swamp鈥�, the phrase was used in 1982 , as he was initiating his own efforts to improve government agency efficiency and downsize the federal government. President Reagan formed the President鈥檚 Private Sector Survey on Cost Control in the Federal Government under CEO J. Peter Grace, an effort more commonly recalled as .

This was a federally scaled version of Reagan鈥檚 which was executed during his tenure as governor of the State of California. The Grace Commission was privately funded and brought together more than 150 corporate leaders to review agencies and functions within the federal government. Many of the Grace Commission鈥檚 recommendations would require legislative buy-in, which prevented a large number of them from ever being implemented.

A similar approach to government efficiency was brought forth during the Clinton Administration in 1993, the , a program championed by then-Vice President Al Gore. This time, advice came from inside experts 鈥� longtime federal employees who had a keen sense of opportunities for efficiency and customer service improvements. Realizing the roadblocks which Congress could pose, the program tried to focus primarily on administrative changes which could be made without lawmakers鈥� approval.

The partnership brought forth plain-English documents and improved customer service, while offering less onerous regulations and downsizing agencies and workforce numbers to record post-Cold War levels.

Reform or reduction: Differing visions for DOGE

While DOGE is not an official federal department and will likely be set up as a (similar to how the Grace Commission was established), it will be able to make recommendations, subject to public transparency laws. However, DOGE will need to rely on Congress to implement said recommendations. Constitutionally, only Congress holds the power to authorize and fund new agencies, and they can choose to take or dismiss feedback from commissions as it relates to the federal budget.

While Musk and Ramaswamy have pledged that they will not be paid for their roles as co-leaders of DOGE, if they are formal employees (unpaid or otherwise), they would be classified as Special Government Employees and would have to file financial disclosures and be subjected to federal employee conflict of interest penalties. Musk and his companies (including X, SpaceX, and Tesla) may face further scrutiny because of his DOGE role as those entities are and still face ongoing federal investigations.

Ramaswamy has , but mass layoffs (or reductions in force, as they are called), aren鈥檛 an easy undertaking. Employees have the ability to appeal to the Merit Systems Protection Board, and because of the Constitutionally granted Congressional authorities, eventually Congress must authorize some of these decisions.

that cuts will 鈥渘ot impact day-to-day life for Americans鈥� or impact Social Security, or Department of Defense spending. Of course, it remains unclear if the goal of DOGE is truly to reduce federal agency services and the size of the federal government, or if it is to balance the federal budget through bipartisan consensus on spending priorities. Both appear, at first blush, to be roles best suited to Congress.

Unique to this administration, legislative caucuses have been formed in both the and the , under the same acronym DOGE, but in this case which stands for Delivering Outstanding Government Efficiency. Caucus members have shared personal goals of reducing the national debt; managing fraud, waste & abuse within the federal government; and to root out wasteful spending (often called .)

This effort to mirror an Executive Advisory Committee with bicameral legislative caucuses may make Congressional implementation of committee recommendations more feasible than prior administrations found. DOGE is scheduled to be sunset in July 2026, compelling it to focus on short-term Executive actions and rely on lawmakers for longer-term support.

Rebuilding trust with the public

It is clear that the incoming Trump Administration has effectively gauged the public鈥檚 sentiment around the effectiveness of federal government agencies and the government in general. To rebuild public trust in these institutions, there are three approaches which need to be generated from within the federal government and brought forward through government agencies:

Humanize civil servants 鈥� Are there ways to feature or call out the individuals who work within the federal government to make it less of a faceless bureaucracy? Of the more than 2 million federal employees, 80% work outside the Washington, DC metro area and are in non-political roles. Americans actually of non-partisan civil servants.

Continuously improve user experience 鈥� Musk has advocated radical transparency under DOGE, encouraging the public to submit their suggestions for wasteful areas to target, and the House DOGE Caucus also has opened up a suggestion email box. Encouraging direct public engagement from citizens could work toward rebuilding trust. Technological improvements which also could improve customers鈥� experience with federal agencies may also address accusations of inefficiency.

Strengthening oversight 鈥� Empower agencies鈥� Offices of Inspectors General to continue to detect and prevent fraud, waste & abuse. Heightened levels of transparency with the public through portals like , risk-based screening tools for federal funding, and generally increasing awareness of Inspectors General work can begin to address accusations of waste.

As the new presidential administration makes ambitious promises of government efficiency, the success of DOGE will depend on balancing bold promises and the limitations of implementation within the Executive Branch. Based on the successes and challenges of the Reagan and Clinton Administrations, public trust in the federal government may increase with a greater focus on transparency, improved user experiences, and newly empowered non-political civil servants.

You can read more about here.

The proposed agency taps into the when dealing with the federal government. The current model of an Office of Inspector General, well-implemented at the federal level, could be more broadly adopted at the state level to address these sentiments.

is defined as improper or careless spending of government money, whereas abuse is defined as intentional, wrongful, or improper use or destruction of government resources which then cost taxpayer money. Waste and abuse are not always illegal behaviors, but they can harm the public perception of taxpayer-funded agencies.

Fraud, one the other hand, is always illegal and involves individuals receive government-provided financial benefits or payments to which they are not entitled. Government agencies are in a position to proactively work in order to better prevent fraud and have accountability and reporting measures in place to detect, investigate, and report fraud, waste, and abuse when such incidents do occur.

Efficiency and expediency can create fraud opportunities

Efficiency is currently the most important measure for agency success and the key focus for many government agencies at this time, according to the 成人VR视频 Institute鈥檚 2024 Government Fraud Waste & Abuse Report which had surveyed government employees across state, local, and federal agencies.

However, this pursuit of efficiency, coupled with a push for expediency in emergency situations, like the global pandemic, can create massive opportunities for fraud, waste, and abuse. These opportunities have been high in recent years with unprecedented levels of emergency resource dollars distributed to communities during and following the Covid-19 pandemic. Indeed, the U.S. reported earlier this year that more than 350 individuals have been sentenced to federal prison and nearly $8.9 billion in federal fraud has been investigated since 2020.

The U.S. , in an expedited effort to release stimulus checks during the first few months of the COVID-19 pandemic, sent out more than $1.4 billion in payments to deceased individuals. were then made in 2023 to grant Treasury cross-agency access to the Social Security Administration鈥檚 death master file, ensuring that agencies cross-reference databases to determine eligibility prior to fund remittance. Further, the Biden-era Inflation Reduction Act has enabled agencies including the IRS to audit large partnerships and to ramp up hiring of accountants.

Who is responsible for leading internal government investigations?

Earlier this year, . made headlines when it was discovered that millions of dollars were awarded through emergency pandemic-era contracts for a county-level Covid-19 vaccination program. A lack of competitive bidding processes cost taxpayers鈥� money, and the no-bid contracts did not receive the standard measures of scrutiny by elected officials. Further, a lack of accountability for time-tracking and the accounts payable processes led to release of fraudulent payments.

Similarly, the was exposed to criminal embezzlement of funds by a high-ranking employee in 2023. A lack of standard accounting practices made auditing the fund particularly challenging, and elected officials in the Delaware State Legislature were frustrated by the state Labor Department鈥檚 lack of transparency following the incident.

In New Jersey, the independent Office of Inspector General (OIG) 鈥� which is tasked with both detecting fraud, waste, and abuse and promoting efficiency 鈥� investigated the government waste in Essex County. However, in the State of Delaware, no such agency exists. on the subject was brought forth earlier this year in the Delaware State Legislature but around the cost of creating a new state agency.

Indeed, many state governments have agency-specific OIGs or bundle government investigations through the Office of the Attorney General, but appear to have an independent statewide office of this nature. For example, Minnesota Gov. Tim Walz received criticism for a lack of government oversight resulting in fraud in the while Minnesota State Senator Mark Koran has of an independent OIG for more than five years.

Garnering awareness around OIGs

Creation of a new government agency can be costly and expands the size of government bureaucracy, which means that legislators must weigh the return on investment which comes from forming or maintaining such agencies. However, such OIG divisions saved or detected opportunities for federal agencies to save $70.1 billion in FY 2022, even with an operating budget of just $3.5 billion, which equates to a 20:1 return on investment for every dollar invested into an OIG program, according to the Council of the Inspectors General鈥檚 .

Yet, are Americans even aware that organizations such as this council exist? There is arguably room to increase awareness of OIGs at both a state and federal level. The Council of Inspectors General also has operated , a website that explains whistleblowing processes and offers access to public reporting hotlines, since 2017, but it has very limited public presence 鈥� in听fact, its only social media presence is on X, with an account that was last used in 2020.

Americans may be deeply divided in their views of how broad the scope and size of the federal government should be, but they are of government as being inefficient and wasteful. Ensuring that type of fraud, waste, and abuse that cost taxpayers money is investigated and addressed is an important step toward reversing these negative perceptions.

You can find more about fraud, waste & abuse in government agencies here.

At the same time, however, AI capabilities aren鈥檛 only available to the criminal underworld. Those same technologies are being used in applications aimed at detecting fraud, waste and abuse (FWA) within government programs, helping officials more quickly spot problem areas than they may find through manual processes. Just as GenAI can aid in deepfakes and the like, so too are technology developers creating solutions to identify those fakes and act upon them more quickly.

So where does that leave the government sector in regard to AI? According to the 成人VR视频 Institute鈥檚 2024 Government Fraud, Waste & Abuse Report, it鈥檚 in a state of flux. Government officials are increasingly coming to recognize AI-driven technology鈥檚 potential for aiding their daily work, but at the same time, they鈥檙e wary of its impact on the future of crime.

The potential for bad actors

There are a number of rising avenues for crime in recent years, and many of them aren鈥檛 even necessarily new. There remains economic challenges and misuse of funds, continued difficulties of prosecuting bad actors, and increased workloads and a lack of expertise allowing some fraud and other illicit issues to slip through the cracks.

However, government officials today are focused on one emerging threat above all others: new technologies such as AI, according to the report. In fact, when asked about the top ways they see FWA increasing within the next two years, new technologies and AI were cited by nearly one-in-five respondents. Further, an additional 13% cited new opportunities for misconduct, such as those aided by the internet and other technological innovations.When asked specifically what it is about AI that strikes fear in government officials鈥� hearts, many cited the ease that AI potentially can bring to many illegal activities, especially its ability to ensnare victims. 鈥淎I makes it easier to go trawling,鈥� answered one respondent. 鈥淭echnology is improving, giving people more ways to communicate with the public without being identified,鈥� responded another.

In addition, a number of respondents pointed to the impact AI technologies will have on current cybersecurity protocols. One respondent said they are most worried that 鈥淎I will be exploited to bypass security features and firewalls,鈥� while another said they expect an 鈥渋ncrease in cyber-fraud and other frauds due to AI technology.鈥� This fear is particularly acute as technologies such as quantum computing are emerging that could make breaking security structures even more possible in the future, unless additional steps are taken to fight these bad actors.

AI鈥檚 role in combating FWA

At the same time, however, AI does not only strike fear into government officials鈥� hearts. They also view it as an opportunity 鈥� albeit one that many are still weighing the pros and cons of undertaking.

When asked whether GenAI in particular can be applied to FWA work, nearly half (45%) said they believed that GenAI can play an active role. Similarly, when asked if it should be applied to FWA 鈥� meaning respondents not only see a use case but believe that such a use case should be acted upon 鈥� about one-third of respondents answered affirmatively, while an additional 55% said they did not know. Just 11% said they believed GenAI should not be applied to FWA work.

However, just because they view the future of GenAI in FWA work positively does not necessarily mean that government officials are rushing to adopt the technology. In fact, just 6% said they are already using GenAI for FWA work, while an additional 4% said they are making plans for its use. More than three-quarters of respondents said they have no plans to use GenAI for these purposes right now, adding that they are willing to wait until use cases become clearer and budgets open up.

By and large, those government officials who conduct fraud detection are doing so most often through tried-and-true methods. Nearly two-thirds, for instance, report cross-referencing databases of social benefit recipients within the state (for example, by using prison records, death records, unemployment insurance beneficiary records, etc.); and 85% said their department or agency has a hotline or other processes in place for citizens or employees to lodge a FWA tip or complaint directly. Just 19% are trying new technologies of any type, a figure that is actually down nine percentage points from the year before.

Of course, these methods of fraud, waste & abuse detection are not mutually exclusive. And particularly in the current environment, government officials may be well-served by combining these tried-and-true methods with newer AI-driven technology tools. The technology has already been used effectively for actions such as Suspicious Activity Report (SAR) filings and day-to-day supervision at the European Central Bank.

It’s no surprise that according to the report, the top two challenges facing government FWA functions are handling an increased volume of workflow, and limited resources and budget. And it is also clear that professionals charged with tackling fraud, waste & abuse see GenAI as a critical way to address these challenges in the future 鈥� and the time for adoption may not be far away.

You can access the 成人VR视频 Institute鈥檚 recent 2024 Government Fraud, Waste & Abuse Report, here.

Despite budget and resource limitations, however, a majority of this year鈥檚 respondents (73%) said they are nevertheless confident they have the tools, resources, and ability to address fraud, waste, and abuse (FWA) issues in their agencies and departments. However, the report also cautions that this confidence may be somewhat illusory, given that the resources available to government employees do not give them a complete picture of the available data for verifying identities or legitimizing beneficiaries.

The survey鈥檚 respondents come from all levels of government 鈥� federal, state, county, and city or municipal. All are involved in some way in the prevention, detection, and investigation of FWA, and all regularly conduct research using public records and other investigative resources.

One consistent finding in these FWA reports over the years is that fraud is as prevalent as ever. Managers and administrators of government programs continue to cite an increase in fraud as one of their top concerns, even though the spike in fraud related to pandemic-era relief programs has largely dissipated. Indeed, 45% of government workers surveyed in 2024 say they expect to see an increase in FWA over the next two years.

False claims and forged documents are still the most common forms of fraud as well, but account takeovers and synthetic identities are not far behind. Meanwhile, waste and abuse of public funds tends to occur most often through billing for unnecessary items or services, excess charges, and kickbacks or bribes.

Artificial intelligence cuts both ways

For the first time ever, the growing interest in generative artificial intelligence (GenAI) is also part of the FWA report. However, there are at least two sides to the GenAI discussion.

On one hand, almost half (45%) of this year鈥檚 survey respondents said they can envision how GenAI might help them detect and prevent fraud. Precisely how the technology could or should be applied is still up for debate, however, and very few government agencies have allocated budget dollars to explore those options. Further, most government agencies do not currently have the technological infrastructure and data capabilities necessary to implement a GenAI solution or tool.

Criminals, on the other hand, are enthusiastically embracing the capabilities that various forms of AI provide, allowing them to become better at faking documents and creating synthetic identities. Not surprisingly, many respondents said they expect that increases in fraud over the next two years will be due at least in part to fraudsters using AI.

Prioritizing efficiency & improving processes

It is also apparent from the 2024 survey that governments at all levels continue to struggle with restricted budgets and lack of resources. Almost half (48%) of survey respondents said their most pressing issue is the increasing volume of work they are expected to handle without any additional resources

You can learn more about the “2024 Government Fraud, Waste & Abuse Report” (now available on Spotify)

Meanwhile, when respondents were asked how their departments measure success, the top response this year was efficiency. Every year, the drive for efficiency tends to vie with service satisfaction as the most important measure of success, but efficiency won out this year due primarily to the high number of local and municipal respondents who mentioned that as a top priority.

As efficiency is the outcome of people, processes, and tools working together in the best possible way, it鈥檚 unsurprising that front-line government officials have consistently over the years expressed a desire to devote more time and energy to front-end prevention and less time to investigative activities, though there is often some overlap. For example, respondents revealed this year that they spend fully one-third (33%) of their time on identity validation, which is both a preventive measure and an investigative activity.

To detect fraud, the top methods mentioned are still cross-referencing public-records databases and investigating whistleblower tips, but one-in-five respondents also said their departments are either using or planning to use machine learning and AI to detect suspicious behavior and anomalous billing patterns. This is a sign, the report suggests, that at least some government agencies are recognizing how improved technology can enhance both efficiency and effectiveness.

A false sense of confidence?

Nevertheless, most government agencies continue to struggle technologically. In fact, more than half of the participants in this year鈥檚 survey said their agency or department does not use an integrated case-management solution or have access to advanced investigative software. Somewhat more concerning is that Google searches and use of public databases are still the primary way that governmental departments verify beneficiary information.

This year鈥檚 report also indicates that some government agencies have worked to improve their technological capabilities, but progress is slow. And unfortunately, slow progress at the current pace of technological change means that many government agencies and departments are falling behind, merely by standing still.

You can download a copy of the 成人VR视频 Institute鈥檚 “” here.

It鈥檚 critical for government agencies to get the process right, however, especially in an environment in which the efficient and effective use of public funds is scrutinized by a variety of parties, including the general public.

Government unemployment agencies, for example, continue to deal with what is seemingly a trifecta of reinforcing complications, including that i) many agencies lost critical talent during the pandemic; ii) recruiting new talent remains a top concern; and iii) modernizing systems is replete with challenges. Sprinkle in the fact that bad actors are employing ever more sophisticated methods to commit fraud and you have a perfect storm.

All of this makes the stakes of getting identity (ID) verification and, more broadly, fraud prevention correct very high. The recent volume of unemployment insurance (UI) investigations has reached over which has stressed many agencies in a variety of ways. Further, the U.S. Government Accountability Office (GAO) $19 billion in incorrect unemployment insurance payments in fiscal year 2022, excluding assessments for specific programs with higher vulnerability to risks, such as the Department of Labor’s Pandemic Unemployment Assistance benefits.

Critical government programs such as the 鈥� which will see $2 billion in funds allocated and includes the recent creation of the Office of Unemployment Insurance Modernization (OUIM) within the Department of Labor 鈥� offer some relief, but procuring and leveraging the funds is a heavy lift unto itself for any agency.

Moreover, 成人VR视频 Institute research shows that many government agencies want to spend more time in the fraud prevention stage of the process 鈥� which includes ID verification 鈥� but the actual time they are spending in this phase is less than desired. Suffice to say there is both a will and a way.

Increasing sophistication of bad actors

Bad actors are increasingly drawn to the UI system and are only adding to the challenges agencies currently face, leveraging sophisticated attacks through technology. Bot attacks, for example, are moving from generally easily detectable standard bots to periodic bots that very closely mimic the typing patterns of humans.

By harnessing the power of artificial intelligence (AI), bad actors are able to more easily scale their efforts while simultaneously creating more convincing attacks. Synthetic identities are one example of this. Creating synthetic IDs involves the use of a single element of legitimate personally identifiable information (most commonly a social security number) layered with fictitious elements. AI-fabricated details have the potential to add further legitimacy to the synthetic elements thereby complicating the overall detection of the identity in question.

Moving beyond individual synthetic IDs is the increasing trend toward fictitious businesses (also known as fictitious employers). Fraudsters can create fictitious companies, complete with fabricated records, websites, and even employees, to facilitate various types of fraud. These fictitious employers can be used to generate false employment histories, income verifications, and employment references.

This trend is on the rise and is made more difficult to detect given the structures of some agencies. With UI and tax commonly under separate leadership within government agencies, identifying fictitious employers is a significant challenge due to disparate data.

Finding the right balance

Combatting fraud, waste, and abuse must be considered in the context of ensuring good actors encounter a frictionless and simple path to receiving proper benefits. This is where the concept of step-up authentication can be leveraged to ensure that the amount of friction applied is commensurate with the level of threat perceived.

When data elements are verified, aligned, and consistent then of course less friction (if any) is the preferred path. Yet, in cases in which anomalies are detected or data is insufficiently verifiable, then a step-up path to further authenticate an identity may be needed. This process should seek to only put in the least amount of friction required to satisfy internal controls.

A variety of technology solutions are at the disposal of state agencies all with slightly different angles in the ID verification process.

Data analytics programs, for example, can detect patterns and anomalies in employment data, such as a high number of employees associated with a particular employer or unusual salary patterns. These advanced analytical techniques can be deployed into existing systems, thereby maintaining a frictionless customer experience while at the same time detecting fraudulent claims and facilitating smooth identity verification.

Applying deep behavioral and biometric analytics is another level of step-up authentication that can be particularly effective against synthetic IDs at the individual level. Indeed, biometric technologies such as facial recognition and behavioral analytics (for example, how someone holds a device) can be powerful antidotes to fraudulent activity; and matching real-time pictures (such as selfies) with government-issued identification documents can significantly deter fraudsters.

And when it comes to fictitious employers, coordinating across departments within an agency and comparing tax data with UI data is key. Identifying fictitious employers is greatly aided by visualizing and comparing trends across these two departments.

Conclusion

Although the U.S. Pandemic Unemployment Assistance benefits ceased on September 4th, 2021, individuals are still recovering from job losses due to the global pandemic, and there are concerns of . Consequently, a substantial number of unemployment insurance benefits are expected to be necessary to support those in need. Not to mention that 68% of government agencies have expressed concerns that they will continue to see more fraud than expected, according to the 成人VR视频 Institute鈥檚 2023 Government Fraud, Waste & Abuse Report.

These sentiments reflect their distress regarding the ongoing prevalence of fraudulent UI claims, which makes addressing the challenges faced by unemployment departments in verifying identities, detecting fraud, and preventing barriers to entry or workflow disruption so critical.

Successfully navigating these challenges will require government agencies to employ a balanced approach that combines industry expertise, technology, and collaboration.

In the past few years, the results of these surveys have been disproportionately impacted by the strain that the global Covid-19 pandemic had inflicted upon government agencies. This year, however, front-line government workers appear to have assimilated the lessons of the pandemic and are back to grappling with many of the same challenges they faced before the pandemic hit 鈥� namely, tight budgets, too much work, not enough resources, obsolete technology, staffing issues, and lack of time for professional development.

The legacy of the pandemic

The newly published gathered survey input from 170 state and local government officials representing more than a dozen different agencies. These annual reports are based on the most comprehensive survey data available from front-line government employees 鈥� such as directors, managers, administrators, and investigators 鈥� whose job is to protect government programs from fraud, exploitation, and abuse.

This year’s results suggest that although government workers have largely put the pandemic behind them, the crisis had forced government agencies to re-think how they operate, and many of the necessary adaptations 鈥� such as the option of remote work and more virtual interaction with beneficiaries 鈥� are now permanent features of government work at both the state and local levels.

Another pandemic-era legacy involves ongoing staffing and retention issues that are coming to the forefront because of a wave of retirement among Baby Boomer-age workers that accelerated during the pandemic. Recruiting skilled talent continues to be a challenge for governments everywhere, especially in areas that demand specialized technical expertise. Not surprisingly, many front-line employees who took on extra work during the pandemic report that their workload has not decreased, due primarily to staffing shortages and budget cuts.

The impact on fraud prevention

One might expect that over-worked employees, strained resources, and lost institutional knowledge would diminish a government agency’s capacity to fight FWA, but that does not seem to be the case everywhere. Indeed, this year’s study found that more than half (59%) of front-line government employees and investigators still feel confident that they have the resources necessary to fight FWA 鈥� although their confidence level is down from 72% in 2022.

One possible reason for this drop in confidence is that removing the pandemic from the equation has done little to diminish overall fraud activity.

In addition to the usual forms of fraud 鈥� such as forged documents, false claims, kickbacks, and stolen identities 鈥� government investigators also report encountering more sophisticated plots to steal the public’s money. Consequently, more than half (55%) of respondents to this year’s survey believe overall fraud activity will continue to increase over the next two years, and that the number of deep-dive investigations requiring additional resources isn’t likely to decrease anytime soon.

Positive signs of change

If one is looking for positive signs of progress, however, it can perhaps be found in the number of survey respondents who no longer list a lack of resources and money as their primary challenges. Comparatively speaking, only 44% of respondents to our 2023 survey said they lacked the resources and budget to effectively combat FWA, compared to almost two-thirds (62%) of respondents in 2020 who said they were plagued by budget woes.

Further, more than half (51%) of this year’s respondents reported having specific budget allocations for acquiring the tools and resources needed to fight FWA. As a result, more government agencies are employing tools that go far beyond the scope of Google to search public records, court documents, government websites, and other resources that investigators frequently use to verify beneficiary claims and identities.

Another positive sign is that 24% of respondents working at state agencies said they were strengthening their FWA teams by hiring more anti-fraud workers. Indeed, allocating additional resources and personnel to the fight against FWA suggests that these agencies are taking the threat of fraud seriously. Unfortunately, it also implies that the growth of FWA is substantial enough to require these additional resources, and that the overall arms race against fraudsters continues to escalate.

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Grimm observed that this is an “” for the healthcare sector, pointing to the increasing number of individuals enrolled in managed care plans for Medicare and Medicaid, the consolidation of markets, the evolution of value-based care, and the expanding role of “nontraditional players” such as health-technology companies and payer-owned providers.

OIG compliance focus areas

Grimm identified nursing homes as her “top priority” with the focus on providing high-quality care. To that end, the Office of the Inspector General (OIG) has worked to identify compliance weaknesses such as “staffing, infection control, and emergency preparedness.” The OIG has also focused on ensuring that state survey deficiencies are “promptly flagged and remedied” and that “incidents of abuse and neglect” are reported.

Poor nursing home care often leads to increased costs when patients are later hospitalized as a result of previous poor care, Grimm noted, adding that part of the OIG’s plan to improve patient care includes the use of the False Claims Act against nursing homes for the “provision of substandard or worthless services” and the exclusion of nursing homeowners and operators from federal healthcare programs when they “egregiously fail” their residents.

Grimm also discussed the need for a “rigorous compliance focus on financial integrity” in managed care, noting that Medicare Advantage plans now cover “more than 30 million Medicare patients”…

Grimm also discussed the need for a “rigorous compliance focus on financial integrity” in managed care, noting that Medicare Advantage plans now cover “more than 30 million Medicare patients” and is expected to cover 50% of Medicare enrollees soon. Medicaid managed care plans already provide services to nearly 80% of Medicaid recipients.

One major compliance concern for Medicare Advantage plans, however, is the use of risk adjustment, which was traditionally designed to compensate plans for the “increased costs of treating older and sicker beneficiaries” and discourage plans from preferential enrollment of healthier individuals. However, risk adjustment can create financial incentives that drive “upcoding in the severity of diagnoses to garner additional payments.”

Grimm noted the OIG’s examination of 20 insurance companies that received $5 billion in risk adjustment payments in 2017. Although these companies received “more than a half-billion dollars” in risk adjustment payments for patients diagnosed with serious mental illness, no services were provided for these diagnosed conditions, she said.

OIG鈥檚 Semiannual Report to Congress

In the OIG’s most recent Semiannual Report to Congress, the OIG reported expected audit recoveries of nearly $1.2 billion and questioned costs of nearly $2.2 billion. The OIG also reported $2.73 billion in expected investigative recoveries from 710 criminal actions and 736 civil actions.

Additionally, the OIG reported the exclusion of 2,332 individuals and entities from federal programs. The OIG’s Semiannual report covers the period from April 1, 2022, through September 30, 2022, and it outlines a three-part strategy to improve nursing home care that focuses on:

• • • Performance 鈥� Understanding what drives nursing home performance and what contributes to poor performance in some nursing homes.
    • Residents First 鈥� Ensuring that nursing homes prioritize quality of care and quality of life for residents.
    • Oversight 鈥� Making sure that the state and federal entities responsible for nursing home oversight detect problems quickly and require rapid remediation.

One of the OIG’s enforcement highlights includes the exclusion from federal healthcare programs of the individual who owned seven nursing homes that had already been excluded because they housed more than 800 residents in a single “unsanitary warehouse without proper food, water, or waste facilities” during Hurricane Ida. Seven residents eventually died.

When state inspectors conducted on-site visits of the warehouse during the aftermath of the hurricane, they observed residents sleeping on mattresses near standing water, residents who were undressed or naked, and residents calling for help but “being left alone with full diapers.” During these visits, the now-excluded owner attempted to threaten, intimidate, and interfere with the inspectors.

The OIG report “identified 1,714 providers out of approximately 742,000 whose billing for telehealth services during the first year of the pandemic” posed a high risk to Medicare.

The OIG conducted seven audits on selected diagnosis codes that Medicare Advantage organizations submitted to the Centers for Medicare and Medicaid Services (CMS) for use in its risk adjustment program. It also conducted two audits using all diagnosis codes. CMS pays Medicare Advantage plans a capitated rate per member, and the risk adjustment program allows Medicare Advantage plans to receive a higher capitated rate for individuals who may require higher levels of care because of certain diagnoses.

In those nine audits, the OIG identified significant overpayments in every Medicare Advantage plan with estimated overpayments totaling more than $71.5 million.

The OIG also identified telehealth services as a Medicare program integrity risk. The OIG report “identified 1,714 providers out of approximately 742,000 whose billing for telehealth services during the first year of the pandemic” posed a high risk to Medicare. Each of those providers had “concerning billing” on at least one of the seven measures the OIG developed to indicate fraud, waste, or abuse of telehealth services. The OIG also identified that more than half of those providers belonged to a practice group with at least one other provider whose billing also posed a high risk to Medicare.

The OIG made several recommendations to CMS to reduce the program integrity risks of telehealth services provided to Medicare beneficiaries.

The remarks, made recently at , are far from surprising, given the flood of targeted sanctions imposed by governments worldwide since Russia’s February 2022 invasion. And the fact that Russian oligarchs have sought to shield their assets and evade sanctions by assigning family members, associates, and others as nominee owners only has added to the work banks must do.

During early examinations, regulators found that banks were struggling to comply with “regional-focused sanctions” imposed by the United States Treasury’s Office of Foreign Assets Control (OFAC), said Lisa Arquette, associate director, anti-money laundering (AML) and cyber fraud branch with the Federal Deposit Insurance Corporation, and speaker at the ACAMS conference. “Those became a little bit more difficult for institutions to implement at the beginning,鈥� Arquette noted. 鈥淏ut I think they’ve worked through that, and OFAC as a partner to financial institutions has done a lot of outreach.”

Arquette explained that it was vital that when there is a change in beneficial ownership of a legal entity customer, banks should “make sure you have a process to identify that person or those people so that they can also be scanned” against sanctions lists. 鈥淭here are lots of moving parts related to a lot of commercial entities and legal entities听鈥� intentionally听鈥� and it’s difficult to know who to add to the scanning process to make sure that you’re not processing transactions that should be blocked or rejected.” she said.

“Malicious actors, threat actors, intentionally may change that information, which is why your diligence is so critically important.”

Stretching ‘finite resources’

As the deluge of Russia sanctions came in wave after wave, banks with “finite resources” needed to devote “an incredible amount of time and energy [to] sanctions compliance,” said speaker Koko Ives, manager,听听AML compliance section in the Division of Supervision and Regulation at the Federal Reserve Board. “The pace, the number, the complexity, of Russia sanctions was really unprecedented,” Ives said.

“The global response with E.U., U.S. and U.K. coordination but not identical sanctions, made it particularly difficult for globally operated institutions to navigate all those sanctions, and that was done well,” Ives said. “I guess their existing sanctions programs were pretty strong because that was surprisingly well done in an incredibly time-intensive and difficult [environment].”

The Fed is examining “with the same frequency as before” and “nothing has changed with our examination process,” she added. “Any sort of [bank compliance] issues are garden variety鈥� related to not being able to update software for [sanctions lists] timely enough so there might be something that slips through, or misunderstanding of [OFAC] general licenses, that kind of thing that causes compliance issues.”

Most banks have done ‘really good job’

Another speaker, Donna Murphy, deputy comptroller for compliance risk with the Office of the Comptroller of the Currency (OCC), said she “would echo” what Arquette and Ives said and added that “institutions spent a tremendous amount of resources dealing with those very fast-moving and complex sanctions programs, and in general did a really good job.

“Where we’ve seen issues is where the sanctions programs were not dynamic enough and sometimes maybe didn’t have the capability 鈥� at least initially, and it had to be built 鈥� to deal with targeted, regional sanctions as opposed to country sanctions, or the complex and evolving structures of some of the sanctioned entities,” Murphy said.

Changes in beneficial ownership or control of legal entities “are very difficult to keep up with as sanctions are evolving and the entities are evolving,鈥� she explained. 鈥淚t is challenging and needs a lot of focus. I think in general the institutions have done a very good job of implementing these really critical programs for our national security.”

Murphy said the OCC has “spent a lot of time focusing on providing as many resources as possible to our examiners.”

She noted that sanctions have not always been a major focus of OCC supervision, but “we’ve really tried to make sure that our examiners understand these evolving and changing sanctions, and [that] we can provide the support for the exams and the institutions.”

Ives added that some Fed supervised institutions have taken “a forward-looking view of the next geopolitical target.

“Some of the institutions are already developing potential strategies if there are going to be new sanctions in a new part of the world, how might that affect the supply chain, assets that could get hung-up, parties you can no longer transact with, and how that may impact their operations,” Ives noted.

Using interagency regulatory guidance

On the topic of third-party risk management, both Arquette and Ives noted that updated interagency regulatory guidance is imminent and could be released any day. Use of third parties by financial institutions is increasing, Ives added. “It can be incredibly beneficial, especially in the fintech area where [banks] may need the expertise,” she said. “But how is [suspicious activity report] information going to be shared? Do you have what you need to be on the right side of sanctions compliance?”

The intent of the updated interagency guidance is to make consistent federal banking agency guidance on third-party risk management “to make it manageable and holistic” for financial institutions, Ives said.

During that six-month period, the OIG reported 320 criminal enforcement actions against individuals or entities that engaged in crimes affecting department programs. It also reported 320 civil actions, including false claims and unjust-enrichment lawsuits, civil monetary penalty settlements, and administrative recoveries relating to provider self-disclosures.

The OIG also excluded 1,043 individuals and entities from participation in federal healthcare programs.

鈥淲e rigorously analyze data to detect concerning trends and outliers, issue compliance guidance for the health care industry, and make recommendations to HHS to improve program integrity,鈥� said Christi A. Grimm, HHS Inspector General . 鈥淥IG鈥檚 deep expertise in fraud, waste, and abuse enables us to offer HHS and its operating divisions technical assistance to design safeguards that mitigate risk in new and expanded programs.鈥�

Highlights of Medicare enforcement efforts

In December 2021, a Texas man was extradited to Houston to serve an that he received in absentia after pleading guilty to two separate cases of conspiracy, healthcare fraud, money laundering, and tax offenses. The government alleged that the home health company owner and his wife received more than $13 million for home health care services that their “patients did not need or receive” between 2006 and 2015. The government also alleged the couple paid illegal kickbacks to patient recruiters to refer patients. The couple went to trial in November 2016, and the husband ultimately pleaded guilty to one count of conspiracy to commit health care fraud, three counts of health care fraud, one count of conspiracy to pay and receive health care kickbacks, three counts of payment and receipt of health care kickbacks, and one count of conspiracy to launder monetary instruments after evidence demonstrated he “attempted to destroy evidence and blackmail and suborn perjury from witnesses.鈥� The owner later pleaded guilty in a separate case to two counts of filing fraudulent tax returns.

The owner’s wife was convicted by the jury after a and sentenced to 75 years in prison for her role in the Medicare fraud scheme. However, on the morning of his sentencing, the owner removed his ankle bracelet, failed to respond to phone calls from the court and failed to appear for his sentencing hearing.

After being listed as an OIG Top 10 most wanted fugitive, he was arrested in Cameroon in January 2019 and extradited to the United States in December 2021.

Also in December 2021, co-owners of a durable medical equipment (DME) company were sentenced to and ordered to pay more than $27 million in restitution for a Medicare kickback conspiracy. The husband and wife operated two DME companies. According to the government, from March 2016 to January 2019, they paid kickbacks and bribes to their co-conspirator’s call center in the Philippines in exchange for signed doctors’ orders for DME. Those signed orders were then “used to submit false claims in excess of $59 million to Medicare.鈥� The couple also entered into “sham contracts that disguised [the kickback] payments as marketing and business process outsourcing” costs.

In November 2021, two men 鈥� Michael Nolan and Richard Epstein 鈥� were sentenced for their roles in a “conspiracy to defraud .” The men ran a Tampa, Fla.-based telemarketing company, REMN Management LLC. Nolan was sentenced to 78 months in prison and fined $2.1 million; and Epstein was sentenced to 63 months in prison and fined $3 million. According to the government, the pair “illegally bribed physicians” to sign thousands of medically unnecessary physicians’ orders for DME and cancer genetic testing. They were also ordered to pay restitution, jointly and severally with each other and other conspirators, of more than $29 million.

Additional OIG findings

The OIG also reported other Medicare spending- and quality-related findings, including:

• • • COVID-19 testing caused an increase in total Medicare Part B spending on laboratory testing in 2020. Medicare Part B spent $1.5 billion on COVID-19 tests in 2020 but only $1.2 billion on non-COVID-19 tests. The decreased non-COVID-19 testing “raises concerns about potential impacts on beneficiary health.”
    • More than half of US states failed to meet performance measures for oversight of nursing homes in three or four consecutive years during fiscal years 2015 to 2018. State surveys of nursing homes are the “primary safeguard for ensuring quality of care and resident safety.” Many of the deficiencies related to the timeliness of surveys.
    • Of the nearly 1 million Medicare beneficiaries diagnosed with opioid-use disorder in 2020, fewer than 16% received medication-assisted treatment. The OIG also found beneficiaries in Florida, Kansas, Nevada, and Texas were less likely to receive medication-assisted treatment than beneficiaries nationwide. The OIG also found racial disparities in access to medication-assisted treatment.

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