Introduction
Appendix C to OMB Circular A-123 (which was last updated in June 2018 as OMB Memorandum M-18-20, Requirements for Payment Integrity Improvement) is hereby modified. Unless otherwise noted, the requirements found in this guidance are effective for Fiscal Year (FY) 2021. This guidance implements the requirements from the Payment Integrity Information Act of 2019 (PIIA).
Throughout the Appendix, the terms “Must” and “Will” denote a requirement that management will comply in all cases. “Should” indicates a presumptively mandatory requirement except in circumstances where the requirement is not relevant for the Agency. “May” or “Could” indicate best practices that may be adopted at the discretion of management. The appendix to this circular contains important terms and definitions. The Agency should consult the terms and definitions in the appendix in conjunction with the main body of this circular for a full understanding of the guidance. Members of the Executive Branch of the Federal Government should consult the Payment Integrity Question and Answer Collection forum if they have questions about this guidance.
Overview
The following paragraphs of this section provide a cursory overview of some of the key Appendix C concepts and requirements. The agency is responsible for consulting the statute, this guidance, and other guidance to both determine applicability of requirements and execute/apply them accordingly. In addition, the agency is responsible for maintaining documentation of fulfilling requirements in this guidance.
Definitions and Abbreviations – Terminology used in Appendix C to Circular A-123 is defined in Appendix 1A and should be consulted in conjunction with the main body of this circular for full understanding and implementation of the guidance. Use of abbreviations is defined in Appendix 1B. (See Sections VIII and IX of this guidance)
Phase 1 and Phase 2 – All programs with annual outlays over $10,000,000 will fall into one of two possible classifications: Phase 1 or Phase 2. Programs that are not likely have an annual amount of improper payments (IP) plus an annual unknown payments (UP) above the statutory threshold (which is either (1) both 1.5 percent of program outlays and $10,000,000 of all program payments made during the FY or (2) $100,000,000) are referred to as being in ‘Phase 1’. If a program in Phase 1 determines that it is likely to annually make IPs plus UPs above the statutory threshold then the program will move into ‘Phase 2’ the following year. Once in Phase 2 a program will have additional requirements such as reporting an annual IP and UP estimate. (See Section II of this guidance)
Types of Payments – All program outlays will fall in one of three possible categories: proper payment; IP; or UP. If a program is in Phase 2 it will need to identify whether the IP is a monetary loss type IP or whether the IP is a non-monetary loss type IP. Programs reporting in Phase 2 will also need to identify their UPs. (See Section I of this guidance)
Improper Payment Risk Assessments – Each program with annual outlays over $10,000,000 must conduct an IP risk assessment at least once every three years to
