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Highlights

What GAO Found

As the nation continues to respond to, and recover from, the COVID-19 pandemic, increases in COVID-19 cases in July, August, and September 2021, primarily due to the Delta variant of the virus, have hampered these efforts. From the end of July 2021 to September 23, 2021, the number of new cases reported each day generally exceeded 100,000, according to Centers for Disease Control and Prevention (CDC) data. This was a daily case count not seen since February 2021 (see figure).

Reported COVID-19 Cases per Day in the U.S., Mar. 1, 2020–Sept. 23, 2021

Meanwhile, COVID-19 vaccination efforts continue. As of September 23, 2021, about 64 percent of the U.S. population eligible for vaccination (those 12 years and older), or almost 183 million individuals, had been fully vaccinated, according to CDC.

The government must remain vigilant and agile to address the evolving COVID-19 pandemic and its cascading impacts. Furthermore, as the administration implements the provisions in the COVID-19 relief laws, the size and scope of these efforts—from distributing funding to implementing new programs—demand strong accountability and oversight. In that vein, GAO has made 209 recommendations across its body of COVID-19 reports issued since June 2020. As of September 30, 2021, agencies had addressed 33 of these recommendations, resulting in improvements including increased oversight of relief payments to individuals and improved transparency of decision-making for emergency use authorizations for vaccines and therapeutics. Agencies partially addressed another 48 recommendations. GAO also raised four matters for congressional consideration, three of which remain open.

In this report, GAO is making 16 new recommendations, including recommendations related to fiscal relief funds for health care providers, recovery funds for states and localities, worker safety and health, and assessing fraud risks to unemployment insurance programs. GAO’s recommendations, if swiftly and effectively implemented, can help improve the government’s ongoing response and recovery efforts as well as help it to prepare for future public health emergencies. GAO’s new findings and recommendations, where applicable, are discussed below.

Relief for Health Care Providers

A total of $178 billion has been appropriated to the Provider Relief Fund (PRF) to reimburse eligible providers for health care–related expenses or lost revenues attributable to COVID-19. As of August 31, 2021, the Department of Health and Human Services (HHS) had allocated and disbursed about $132.5 billion of this amount and had allocated but not yet disbursed about $21.5 billion; the remaining $24.1 billion was unallocated and undisbursed. On September 10, 2021, HHS announced that $17 billion of the previously unallocated $24.1 billion would be allocated for a general distribution to a broad range of providers who could document COVID-related revenue loss and expenses. HHS expected to begin disbursing the funds in December 2021.

As of September 2021, HHS’s Health Resources and Services Administration (HRSA) had not established time frames for implementing and completing post payment reviews for all PRF payments. In addition, the agency had not finalized procedures for recovery of overpayments or recovered the bulk of the overpayments that it had already identified.

Without post-payment oversight to help ensure that relief payments are made only to eligible providers in correct amounts and to identify unused payments or payments not properly used, HHS cannot fully address stated payment integrity risks for the PRF and seek to recover overpayments, unused payments, or payments not properly used. GAO recommends that HRSA take steps to finalize and implement post-payment oversight. Specifically, HRSA should establish time frames for completing post-payment reviews to promptly address identified risks and identify overpayments made from the PRF, such as payments made in incorrect amounts or payments to ineligible providers; and it should finalize procedures and implement post-payment recovery of any PRF overpayments, unused payments, or payments not properly used. HHS—which includes HRSA—partially agreed with these recommendations.

Coronavirus State and Local Fiscal Recovery Funds

In March 2021, the American Rescue Plan Act of 2021 (ARPA) appropriated $350 billion to the Department of the Treasury (Treasury) to provide payments from the Coronavirus State and Local Fiscal Recovery Funds (CSLFRF). The CSLFRF allocates funds to states, the District of Columbia, localities, tribal governments, and U.S. territories to cover a broad range of costs stemming from the COVID-19 pandemic’s fiscal effects. According to Treasury data, it had distributed approximately $240 billion from the CSLFRF to recipients as of August 31, 2021 (see figure).

Coronavirus State and Local Fiscal Recovery Funds Allocations and Treasury Distributions as of Aug. 31, 2021, by Recipient Type

Note: For more details, see the Coronavirus State and Local Fiscal Recovery Funds enclosure in appendix I.
aNon-entitlement units of local government are local governments typically serving populations of less than 50,000.

As of July 2021, some of the 48 states that responded to GAO’s survey reported that they had somewhat less than or much less than sufficient capacity to report on their use of CSLFRF allocation consistent with federal requirements (17 of 48 states), capacity to disburse the funds (13 of 48 states), and apply appropriate internal controls and respond to inquiries about requirements (10 of 48 states). In addition, most states (44 of 48) reported that they had taken or planned to take additional steps—such as hiring new staff or reassigning existing staff—to help them manage their CSLFRF allocations.

As of August 2021, Treasury was developing—but had not finalized or documented—key internal processes and control activities to monitor recipients’ use of their CSLFRF allocations for allowable purposes and to respond to internal control and compliance findings. According to officials, these internal processes and control activities were in the development stage, partly because of the short time frame since ARPA’s enactment and because Treasury’s Office of Recovery Programs, established in April 2021, continues to work to recruit and onboard key team members.

Until Treasury properly designs and documents policies and procedures to guide CSLFRF program officials and other responsible oversight parties in the Office of Recovery Programs, there is a risk that key control activities needed to help ensure program management fulfills its recipient monitoring and oversight responsibilities may not be established or applied effectively and consistently. This risk may be particularly acute with respect to monitoring state and local recipients that face capacity challenges in managing their CSLFRF allocations in accordance with federal requirements, as some survey respondents noted. GAO recommends that Treasury design and document timely and sufficient policies and procedures for monitoring CSLFRF recipients to provide assurance that recipients are managing their allocations in compliance with laws, regulations, agency guidance, and award terms and conditions. Treasury agreed with the recommendation.

Unemployment Insurance Fraud Risk Management

GAO continues to have concerns about potential fraud in the unemployment insurance (UI) program, including concerns about Department of Labor (DOL) efforts to assess and manage program fraud risks. During the pandemic, fraudulent and potentially fraudulent activity has increased substantially and new types of fraud have emerged, according to DOL officials. For example, in June 2021, DOL’s Office of Inspector General reported that it had identified nearly $8 billion in potentially fraudulent UI benefits paid from March 2020 through October 2020. Improper payments have also been a long-standing concern in the regular unemployment insurance program, suggesting that the program may be vulnerable to fraud. While DOL continues to identify and implement strategies to address potential fraud and has some ongoing program integrity activities, it has not comprehensively assessed fraud risks in alignment with leading practices identified in GAO’s Fraud Risk Framework, which by law must be incorporated in guidelines established by the Office of Management and Budget for agencies.

DOL has not clearly assigned defined responsibilities to a dedicated entity for designing and overseeing fraud risk management activities. Without a dedicated entity with defined responsibilities to lead antifraud initiatives, including the process of assessing fraud risks to UI programs, DOL may not be strategically managing UI fraud risks. GAO recommends that DOL designate a dedicated entity and document its responsibilities for managing the process of assessing fraud risks to the unemployment insurance program, consistent with leading practices as provided in GAO’s Fraud Risk Framework. This entity should have, among other things, clearly defined and documented responsibilities and authority for managing fraud risk assessments and for facilitating communication among stakeholders regarding fraud-related issues. DOL neither agreed nor disagreed with this recommendation.

DOL also has not comprehensively assessed UI fraud risks in alignment with leading practices identified in GAO’s Fraud Risk Framework. These leading practices call for federal managers to plan regular fraud risk assessments and determine their fraud risk profile, among other things. Such assessments would provide reasonable assurance that DOL has identified the most significant fraud risks for the regular UI program that will exist after the pandemic. For example, some fraud risks identified in the CARES Act UI programs may continue to exist in the regular UI program after the temporary UI programs expire. GAO recommends that DOL (1) identify inherent fraud risks facing the unemployment insurance program, (2) assess the likelihood and impact of inherent fraud risks facing the program, (3) determine fraud risk tolerance for the program, (4) examine the suitability of existing fraud controls in the program and prioritize residual fraud risks, and (5) document the fraud risk profile for the program. DOL neither agreed nor disagreed with these recommendations.

FEMA’s Disaster Relief Fund and Assistance to State, Local, Tribal, and Territorial Governments

The Federal Emergency Management Agency (FEMA) has used the Disaster Relief Fund to respond to the COVID-19 pandemic—the first time the fund has been used during a nationwide public health emergency. For example, from September 1, 2020 to August 31, 2021, FEMA obligated a total of approximately $26.8 billion through one type of disaster assistance, Public Assistance, for emergency protective measures, such as eligible medical care, the purchase and distribution of food, and distribution of personal protective equipment.

GAO found that FEMA inconsistently interpreted and applied its policies for expenses eligible for COVID-19 Public Assistance within and across its 10 regions. For example, officials in one state said that FEMA at one point had deemed the provision of personal protective equipment at correctional facilities as ineligible for reimbursement in their region but that states in other regions had received reimbursement for the same expense. These inconsistencies were due to, among other things, changes in policies as FEMA used the Public Assistance program for the first time to respond to a nationwide emergency. FEMA officials stated that it was difficult to ensure consistency in policies as different states and regions are not experiencing the same things at the same time.

FEMA is likely to receive applications for reimbursement for a larger number of projects than it estimated earlier in 2021, given the surge in COVID-19 cases this summer. To improve the consistency of the agency’s interpretation and application of the COVID-19 Public Assistance policy, GAO recommends that FEMA further clarify and communicate eligibility requirements nationwide. GAO also recommends that FEMA require the agency’s Public Assistance employees in the regions and at its Consolidated Resource Centers to attend training on changes to COVID-19 Public Assistance policy. The Department of Homeland Security—which includes FEMA— agreed with both of these recommendations.

Loans for Aviation and Other Eligible Businesses

Treasury has executed 35 loan agreements with certain aviation businesses and other businesses deemed critical to maintaining national security. These loans have totaled about $22 billion of the $46 billion authorized by the CARES Act for loans and loan guarantees to such businesses. As directed by the CARES Act, Treasury required certain loan recipients to provide financial assets, such as warrants that give the federal government an option to buy shares of stock at a predetermined price before a specified date, to protect taxpayer interests.

According to Treasury officials, it is likely that, if the airline industry continues to recover and borrowers do not default, the warrants could have higher values than the predetermined price Treasury would have to pay to act on them. Treasury has not exercised any of the warrants for stock it received from nine businesses, nor has it developed policies and procedures for determining when to act on the warrants to benefit the taxpayer. GAO recommends that Treasury develop policies and procedures to determine when to act on warrants obtained as part of the loan program for aviation and other eligible businesses to benefit the taxpayers. Treasury agreed with this recommendation.

Payroll Support Assistance to Aviation Businesses

As of September 2021, Treasury had made payments totaling $59 billion of $63 billion provided for the Payroll Support Programs to support aviation business. These payments were to be used exclusively for the continuation of wages, salaries, and benefits.

Similar to Treasury’s requirement for loans for aviation and other eligible businesses, Treasury required certain Payroll Support Program recipients to provide warrants, as allowed by the CARES Act. As of September 2021, 14 recipients had provided a total of 58 million warrants.

As Treasury continues to hold these warrants for stock purchases, the warrants may increase in value as the airline industry recovers. Treasury has not exercised any of the warrants for stock it holds in the 14 businesses, nor has it documented policies and procedures to guide when to act on the warrants to fulfill the statutory purpose to provide appropriate compensation to the federal government. GAO recommends that Treasury develop policies and procedures to determine when to act on warrants obtained as part of the Payroll Support Program to provide appropriate compensation to the federal government. Treasury agreed with this recommendation.

COVID-19 Testing

Use is increasing for antigen tests, one of two types of COVID-19 diagnostic and screening tests for which HHS’s Food and Drug Administration has issued emergency use authorizations. These “rapid” antigen tests typically have a turnaround time of about 30 minutes or less for results, compared with 1 to 3 days for molecular tests, the second type of test HHS authorized. Antigen tests can be conducted at doctors’ offices or in homes or other settings; some antigen tests can be conducted without a prescription.

Since June 2020, HHS has worked to encourage and improve the reporting of antigen testing data to local, state, and federal health officials. However, HHS officials told GAO reporting of antigen test results is incomplete, which prevents HHS from using antigen testing data for COVID-19 surveillance. HHS is taking additional steps aimed at improving reporting of antigen test data. For example, officials told GAO that HHS will continue to make enhancements to data reporting by building reporting methods into the testing process, such as for testing in schools and workplaces.

HHS is also considering surveillance approaches to supplement or enhance current surveillance efforts. For example, HHS is exploring wastewater surveillance approaches, which provide data that can complement and confirm other forms of surveillance for COVID-19 and an efficient pooled community sample that is particularly useful in areas where timely COVID-19 clinical testing is underutilized or unavailable, according to HHS officials.

Worker Safety and Health

The Occupational Safety and Health Administration (OSHA) faced challenges in enforcing workplace safety and health standards during the COVID-19 pandemic, but the agency has not assessed lessons learned or promising practices. According to inspectors from area offices, they faced challenges related to resources and to communication and guidance, such as a lack of timely guidance from OSHA headquarters. GAO recommends that OSHA assess—as soon as feasible and, as appropriate, periodically thereafter—various challenges related to resources and to communication and guidance that the agency has faced in its response to the COVID-19 pandemic and take related actions as warranted. The Department of Labor—which includes OSHA—partially agreed with this recommendation.

Advance Child Tax Credit Payments

ARPA temporarily expanded eligibility for the child tax credit (CTC) to additional qualified individuals by eliminating a requirement that individuals must earn a minimum amount annually to be eligible. ARPA also temporarily increased the maximum amount of the CTC from $2,000 per qualifying child to $3,000 or $3,600, depending on the child’s age. As required by ARPA, the Internal Revenue Service (IRS) and Treasury are responsible for issuing half of the CTC through periodic advance payments, known as advance CTC payments.

IRS reported disbursing more than 106 million advance payments totaling over $45.5 billion as of September 25, 2021 (see figure).

Dollar Amount and Count of Advance Child Tax Credit Payments, by Month, as of Sept. 25, 2021

IRS is conducting and planning several outreach efforts to increase the public’s awareness of advance CTC payments. However, IRS and Treasury have not developed a comprehensive estimate of individuals who are potentially eligible for advance CTC payments and the agencies have not set a participation goal. Such an estimate would enable Treasury and IRS to measure the tax credit’s participation rate, providing greater clarity regarding populations at risk of not receiving the payments. GAO recommends that Treasury, in coordination with IRS, estimate the number of individuals, including nonfilers, who are eligible for advance CTC payments, measure the 2021 participation rate based on that estimate, and use that estimate to develop targeted outreach and communications efforts for the 2022 filing season; the participation rate could include individuals who opt in and out of the advance payments. Treasury neither agreed nor disagreed with this recommendation.

Child Nutrition

Child nutrition programs administered by the Department of Agriculture’s Food and Nutrition Service (FNS) supply cash reimbursements to schools or other programs for meals and snacks provided to eligible children nationwide. In fiscal year 2019, before the pandemic, the four largest programs—the National School Lunch Program, School Breakfast Program, Summer Food Service Program, and Child and Adult Care Food Program—along with other child nutrition programs, received $23.1 billion in federal funds. During a typical year, two of these programs—the National School Lunch Program and the School Breakfast Program—subsidize meals for nearly 30 million children in approximately 95,000 elementary and secondary schools nationwide.

As of July 2021, FNS officials were unable to provide a plan showing how FNS intends to comprehensively analyze lessons learned during the pandemic, such as from operational and financial challenges. Further, according to FNS officials, while the School Meals Operations study—launched in spring 2021—is surveying school districts and state agencies that administer the federal child nutrition programs, the study is not gathering local perspectives directly from child care centers and day care homes or other local program sponsors that are not school districts. As a result, FNS may miss opportunities to identify lessons learned and will lack comprehensive information to aid its future planning. GAO recommends that the Department of Agriculture document its plan to analyze lessons learned from operating child nutrition programs during the COVID-19 pandemic. This plan should include a description of how the department will gather perspectives of key stakeholders, such as Child and Adult Care Food Program institutions and nonschool Summer Food Service Program sponsors. The Department of Agriculture—which includes FNS—agreed with this recommendation.

Why GAO Did This Study

As of September 23, 2021, the U.S. had about 43 million reported cases of COVID-19 and about 699,000 reported deaths, according to CDC. The country also continues to experience economic repercussions from the pandemic.

Six relief laws, including the CARES Act, had been enacted as of August 31, 2021, to address the public health and economic threats posed by COVID-19. As of that same date (the most recent for which government-wide data was available), the federal government had obligated a total of $3.9 trillion and expended $3.4 trillion of the $4.8 trillion in COVID-19 relief funds that had been appropriated by these six laws, as reported by federal agencies.

The CARES Act includes a provision for GAO to report on its ongoing monitoring and oversight efforts related to the COVID-19 pandemic. This report examines the federal government’s continued efforts to respond to, and recover from, the COVID-19 pandemic.

GAO reviewed data, documents, and guidance from federal agencies about their activities. GAO also interviewed federal and state officials, stakeholders from organizations for localities, and other stakeholders.

What GAO Recommends

GAO is making 16 new recommendations for agencies that are detailed in this Highlights and in the report.

Recommendations

Recommendations for Executive Action

Recommendations for Executive Action

We are making a total of 16 recommendations to federal agencies:
NumberAgencyRecommendation
1Department of Health and Human Services : Public Health Service : Health Resources and Services Administration

The Administrator of the Health Resources and Services Administration should establish time frames for completing post-payment reviews to promptly address identified risks and identify overpayments made from the Provider Relief Fund, such as payments made in incorrect amounts or payments to ineligible providers. See the Relief for Health Care Providers enclosure. (Recommendation 1)
2Department of Health and Human Services : Public Health Service : Health Resources and Services Administration

The Administrator of the Health Resources and Services Administration should finalize procedures and implement post-payment recovery of any Provider Relief Fund overpayments, unused payments, or payments not properly used. See the Relief for Health Care Providers enclosure. (Recommendation 2)
3Department of the Treasury

The Secretary of the Treasury should design and document timely and sufficient policies and procedures for monitoring recipients of Coronavirus State and Local Fiscal Recovery Funds to provide assurance that recipients are managing their allocations in compliance with laws, regulations, agency guidance, and award terms and conditions, including ensuring that expenditures are made for allowable purposes. See the Coronavirus State and Local Fiscal Recovery Funds enclosure. (Recommendation 3)
4Department of Labor

The Secretary of Labor should designate a dedicated entity and document its responsibilities for managing the process of assessing fraud risks to the unemployment insurance program, consistent with leading practices as provided in our Fraud Risk Framework. This entity should have, among other things, clearly defined and documented responsibilities and authority for managing fraud risk assessments and for facilitating communication among stakeholders regarding fraud-related issues. See the Unemployment Insurance Fraud Risk Management enclosure. (Recommendation 4)
5Department of Labor

The Secretary of Labor should identify inherent fraud risks facing the unemployment insurance program. See the Unemployment Insurance Fraud Risk Management enclosure. (Recommendation 5)
6Department of Labor

The Secretary of Labor should assess the likelihood and impact of inherent fraud risks facing the unemployment insurance program. See the Unemployment Insurance Fraud Risk Management enclosure. (Recommendation 6)
7Department of Labor

The Secretary of Labor should determine fraud risk tolerance for the unemployment insurance program. See the Unemployment Insurance Fraud Risk Management enclosure. (Recommendation 7)
8Department of Labor

The Secretary of Labor should examine the suitability of existing fraud controls in the unemployment insurance program and prioritize residual fraud risks. See the Unemployment Insurance Fraud Risk Management enclosure. (Recommendation 8)
9Department of Labor

The Secretary of Labor should document the fraud risk profile for the unemployment insurance program. See the Unemployment Insurance Fraud Risk Management enclosure. (Recommendation 9)
10Department of Homeland Security : Directorate of Emergency Preparedness and Response : Federal Emergency Management Agency

The Federal Emergency Management Agency Administrator should improve the consistency of the agency’s interpretation and application of the COVID-19 Public Assistance policy within and across regions by further clarifying and communicating eligibility requirements nationwide. See the FEMA’s Disaster Relief Fund and Assistance to State, Local, Tribal, and Territorial Governments enclosure. (Recommendation 10)
11Department of Homeland Security : Directorate of Emergency Preparedness and Response : Federal Emergency Management Agency

The Federal Emergency Management Agency Administrator should require the agency’s Public Assistance Program employees in the regions and at its Consolidated Resource Centers to attend training on changes to COVID-19 Public Assistance policy to help ensure it is interpreted and applied consistently nationwide. See the FEMA’s Disaster Relief Fund and Assistance to State, Local, Tribal, and Territorial Governments enclosure. (Recommendation 11)
12Department of the Treasury

The Secretary of the Treasury should develop policies and procedures to determine when to act on warrants obtained as part of the loan program for aviation and other eligible businesses to benefit the taxpayers. See the Loans for Aviation and Other Eligible Businesses enclosure. (Recommendation 12)
13Department of the Treasury

The Secretary of the Treasury should develop policies and procedures to determine when to act on warrants obtained as part of the Payroll Support Program to provide appropriate compensation to the federal government. See the Payroll Support Assistance to Aviation Businesses enclosure. (Recommendation 13)
14Department of Labor : Occupational Safety and Health Administration

The Assistant Secretary of Labor for Occupational Safety and Health should assess—as soon as feasible and, as appropriate, periodically thereafter—various challenges related to resources and to communication and guidance that the Occupational Safety and Health Administration has faced in its response to the COVID-19 pandemic and should take related actions as warranted. See the Worker Safety and Health enclosure. (Recommendation 14)
15Department of the Treasury

The Secretary of the Treasury, in coordination with the Commissioner of Internal Revenue, should estimate the number of individuals, including nonfilers, who are eligible for advance child tax credit payments, measure the 2021 participation rate based on that estimate, and use that estimate to develop targeted outreach and communications efforts for the 2022 filing season; the participation rate could include individuals who opt in and out of the advance payments. See the Advance Child Tax Credit and Economic Impact Payments enclosure. (Recommendation 15)
16Department of Agriculture

The Secretary of Agriculture should document the Department of Agriculture’s plan to analyze lessons learned from operating child nutrition programs during the COVID-19 pandemic. This plan should include a description of how the department will gather perspectives of key stakeholders, such as Child and Adult Care Food Program institutions and nonschool Summer Food Service Program sponsors. See the Child Nutrition enclosure. (Recommendation 16)
View recommendation(s) status

Introduction 


Congressional Committees

As the nation continues to respond to the Coronavirus Disease 2019 (COVID-19) pandemic, response and recovery efforts have been hampered by increases in COVID-19 cases, due primarily to the Delta variant of the virus.[1] Although the daily number of new cases had begun to decline earlier in the summer, the number of new cases reported each day from the end of July 2021, to September 23, 2021, generally exceeded 100,000, according to the Centers for Disease Control and Prevention (CDC)—a daily case count not seen since February 2021 and substantially higher than the approximately 8,000 new cases reported per day in mid-June. As a result of the rise in cases, CDC, state and local governments, and private businesses revised their mask guidance or requirements.[2]

While vaccination efforts continue, vaccination rates across the U.S. vary. As of September 23, 2021, about 64 percent of the U.S population eligible for vaccination (those 12 years and older)—about 183 million individuals—had been fully vaccinated, according to CDC.

Hospitals reported an average of more than 9,000 individuals hospitalized daily for the 7-day period from September 17 to September 23, 2021, a decrease from more than 12,000 individuals hospitalized daily during a 7-day period in August 2021.[3] According to CDC, at the end of August 2021, new admissions of patients with confirmed COVID-19 were at their highest levels since the beginning of the pandemic for all age groups under 50 years old.[4] As of the end of September 2021, CDC reported that weekly hospitalization rates for children aged 11 and younger due to COVID-19 were at their highest since the beginning of the pandemic, although hospitalizations due to COVID-19 are lower in children than they are in adults. As the pandemic continues, the U.S. and the world may continue to see fluctuating increases in new cases, making an agile federal response to the pandemic even more important.

Ongoing demand for medical supplies for the COVID-19 response, including testing materials and personal protective equipment, has resulted in fluctuating shortages. For example, on September 2, 2021, CDC announced a temporary shortage of point-of-care and over-the-counter COVID-19 testing supplies. In addition, the federal government continues to provide personal protective equipment—N95 respirators, surgical masks, surgical and isolation gowns, and nitrile and other gloves—to states, with gloves accounting for the largest number of shipments. For example, during the 7-day period from September 18 to September 24, 2021, the federal government and its commercial partners shipped close to 700 million units of gloves, over 44 million surgical masks, over 13 million surgical gowns, and close to 5 million N95 respirators to all 50 states, the District of Columbia, and Puerto Rico.

To help prevent medical supply shortages for future public health emergencies, the Department of Health and Human Services (HHS) released its pandemic supply chain resilience strategy, as called for in Executive Order 14001, in September 2021.[5] The strategy outlines the goals and objectives for a resilient public health supply chain and the “path for implementation” of the strategy.[6]

Since March 2020, Congress has provided about $4.8 trillion through the CARES Act and other laws that were enacted to fund efforts to help the nation respond to and recover from the COVID-19 pandemic (COVID-19 relief laws).[7]

Ongoing implementation of the provisions in the COVID-19 relief laws and the size and scope of these efforts—from distributing funding to implementing new programs—continue to demand strong accountability and oversight. Furthermore, the government must remain vigilant and agile to address the evolving COVID-19 pandemic well into its second year. The current annual hurricane and flu seasons could place further burdens on the already overtaxed health care, medical supply, and emergency management sectors.[8]

The CARES Act includes a provision for us to report regularly on the federal response to the pandemic. Specifically, the act requires us to monitor and oversee the federal government’s efforts to prepare for, respond to, and recover from the COVID-19 pandemic.[9] To date, we have issued seven recurring oversight reports in response to this provision.[10]

This report examines the federal government’s continued efforts to respond to and recover from the COVID-19 pandemic. We are making 16 new recommendations to federal agencies in areas including fiscal relief funds for health care providers, worker safety and health, assessing fraud risks to unemployment insurance programs, and state and local recovery funds.

This report also includes 37 enclosures addressing a range of federal programs and activities across the government concerning public health and the economy (see app. I). Figure 1 lists these enclosures by topic area and highlights those with new recommendations.

Figure 1: Report Enclosures by Topic Area

In addition to the seven recurring oversight reports, we have issued over 100 targeted COVID-19-related reports, testimonies, and science and technology spotlights in areas such as housing protections, Medicare and Medicaid program flexibilities, and digital vaccine credentials. We also have reviews ongoing in other areas. See appendix II for highlights pages from our recently issued work on COVID-19 and appendix III for a list of our ongoing work related to COVID-19.

Across our body of COVID-19-related reports, we have made 209 recommendations to federal agencies and have raised four matters for congressional consideration to improve the federal government’s response efforts. As of September 30, 2021, agencies had addressed 33 of these recommendations and partially addressed 48.[11]

See figure 2 for an overview of the status of our COVID-19-related recommendations by department. For a complete list of our COVID-related products, see https://www.gao.gov/coronavirus.

Figure 2: Status of Prior GAO Recommendations from COVID-19-Related Work, by Federal Department or Agency, as of Sept. 30, 2021

Note: For this figure, recommendations made to the Internal Revenue Service are counted toward the total of recommendations made to the Department of the Treasury.

Given the government-wide scope of this report, we undertook a variety of methodologies to complete our work, including examining a wide range of data sources and conducting interviews with federal and state officials and stakeholders, such as those from four antihunger organizations and organizations that represent landlords and lower-income households. We also examined federal laws, agency documents, and guidance, among other things. In each enclosure, we include a summary of the methodology specific to the work conducted.

We conducted this performance audit from March 2021 to October 2021 in accordance with generally accepted government auditing standards. Those standards require that we plan and perform the audit to obtain sufficient, appropriate evidence to provide a reasonable basis for our findings and conclusions based on our audit objectives. We believe the evidence obtained provides a reasonable basis for our findings and conclusions based on our audit objectives.

Background 


Public Health and Economic Effects

The COVID-19 pandemic continues to have devastating effects on public health and the economy. As of September 23, 2021, the U.S. had about 43 million reported cases of COVID-19, according to CDC.[12] As of the week ending September 25, 2021, the U.S. had about 699,000 reported deaths attributed to COVID-19.[13] In addition, the country continues to experience high unemployment. As of September 2021, about 7.7 million individuals were unemployed, compared with nearly 5.8 million at the beginning of 2020.[14]

The number of newly reported COVID-19 cases began increasing at the end of July 2021, following a decrease in daily cases since the January 2021 peak. Between September 10 and September 23, 2021, new reported COVID-19 cases averaged about 138,000 per day—close to 60 percent of the peak that occurred during January 2021.[15] See figure 3 for 7-day case averages. During this same period, reported new COVID-19 cases per day, on average, increased in 14 jurisdictions, held steady in 20 jurisdictions, and decreased in 18 jurisdictions.[16]

Figure 3: Reported COVID-19 Cases per Day in the U.S., Mar. 1, 2020–Sept. 23, 2021

Note: Reported COVID-19 cases include confirmed and probable cases. Beginning April 14, 2020, states could include probable as well as confirmed COVID-19 cases in their reports to CDC. Previously, counts included only confirmed cases. According to CDC, the actual number of cases is unknown for a variety of reasons, including that people who have been infected may not have been tested or may not have sought medical care. See CDC, “COVID Data Tracker: Trends in Number of COVID-19 Cases and Deaths in the U.S. Reported to CDC, by State/Territory,” accessed September 30, 2021, https://covid.cdc.gov/covid-data-tracker/#trends_dailytrendscases.

According to data from CDC’s National Center for Health Statistics, the number of deaths in the U.S. has been higher during the pandemic than the expected number of deaths based on previous years’ data. For example, from January 1, 2020, through September 4, 2021, about 687,000 more deaths occurred from COVID-19 and other causes than would be normally expected (see fig. 4).

Figure 4: Higher-Than-Expected Weekly Mortality in the U.S., Jan. 2020 to Sept. 2021

Note: The data shown represent the number of deaths from all causes reported in the U.S.in a given week through September 4, 2021, that exceeded the upper-bound threshold of expected deaths calculated by CDC’s NCHS on the basis of variation in mortality in prior years. For further details of CDC’s methodology for estimating this upper-bound threshold, see CDC, National Center for Health Statistics, “Excess Deaths Associated with COVID-19,” accessed October 4, 2021, https://www.cdc.gov/nchs/nvss/vsrr/covid19/excess_deaths.htm. The number of deaths in recent weeks should be interpreted cautiously, as this figure relies on provisional data that are generally less complete.

Providing the public with safe and effective vaccines to protect people from getting critically ill with COVID-19 is crucial to mitigating the public health and economic impacts of the virus and ending the pandemic. Two COVID-19 vaccines requiring two doses were authorized by the Food and Drug Administration (FDA) for emergency use in December 2020 and a third vaccine, requiring one dose, was authorized in February 2021.[17] On August 23, 2021, FDA approved Pfizer’s biologics license application for its two-dose vaccine for individuals aged 16 years and older.[18]

On August 18, 2021, the administration recommended that individuals who received the two-dose vaccines should get a third “booster” shot 8 months after the second dose, pending FDA authorization and a recommendation from CDC’s immunization advisory committee.[19] On September 22, 2021, FDA amended the authorization for the Pfizer vaccine to allow for a booster shot to be administered to individuals aged 65 years and older, individuals aged 18 to 64 years who are at high risk of developing severe illness from COVID-19, and individuals aged 18 to 64 years whose frequent institutional or occupational exposure to COVID-19 puts them at high risk of serious complications from COVID-19, including severe illness. Boosters for these individuals are to be administered at least 6 months after completion of the first series of shots.[20] In mid-October, FDA’s vaccine advisory panel recommended boosters of the Moderna and Johnson & Johnson vaccines.[21]

As of September 23, 2021, almost 390 million doses of COVID-19 vaccine had been administered, according to CDC. Since the vaccination peak in early April 2021, the number of doses of COVID-19 vaccine administered each day have generally declined. As of September 23, 2021, the number of daily administered doses was less than one-fifth of those administered in the April peak (see fig. 5).

Figure 5: Daily Count of COVID-19 Vaccine Doses Administered in the U.S. and Reported to CDC, Dec. 14, 2020–Sept. 23, 2021

Notes: The data shown reflect COVID-19 vaccine doses administered in the U.S. as reported to CDC by state, territorial, and local public health agencies and by federal entities since the national vaccine program began on December 14, 2020. The data include doses administered through all vaccine partners, including jurisdictional partner clinics, retail pharmacies, long-term care facilities, Federal Emergency Management Agency and Health Resources and Services Administration partner sites, and federal entity facilities. See CDC, “COVID Data Tracker: COVID-19 Vaccinations in the United States,” accessed on September 30, 2021, https://covid.cdc.gov/covid-data-tracker/#vaccinations.
As of September 30, 2021, one COVID-19 vaccine had been licensed by the Food and Drug Administration for individuals aged 16 years and older and was authorized for emergency use for individuals aged 12 to 15 years. Two additional COVID-19 vaccines were authorized for emergency use for individuals aged 18 years and older. The approved vaccine and one of the vaccines authorized for emergency use are two-dose regimens; the other vaccine with emergency authorization requires one dose. The number of doses administered on a given day may be affected by several factors, such as weekend days, holidays, weather, and vaccine availability. The most recent days of reporting may be more impacted by reporting delays, and all reported numbers may change over time as historical data are reported to CDC.

In addition to the impact on public health, the pandemic continues to present economic challenges, particularly for the labor market, though the economy has improved in recent months. According to data from the Department of Labor, labor market conditions improved in June, July, August, and September 2021 but remained worse relative to the prepandemic period. For example, although initial unemployment insurance claims generally declined through September 2021, initial claims remain high compared to the prepandemic period.

Moreover, in September 2021, the employment-to-population ratio, which measures the share of the population employed, was 58.7 percent—a slight increase from the previous month. However, this ratio was 2.4 percentage points lower than in the prepandemic period, indicating that labor market conditions remain worse than in the prepandemic period (see fig. 6).[22] See the Economic Indicators enclosure in appendix I for more information.

Figure 6: Employment-to-Population Ratio, Jan. 2019–Sept. 2021

Federal COVID-19 Funding and Spending

As of August 31, 2021, the most recent date for which government-wide information was available at the time of our analysis, the federal government had obligated a total of $3.9 trillion and expended $3.4 trillion of the $4.8 trillion in appropriated COVID-19 relief funds as reported by federal agencies to the Department of the Treasury’s Governmentwide Treasury Account Symbol Adjusted Trial Balance System.[23] Obligations and expenditures relative to the amounts appropriated through COVID-19 relief laws have varied over time, as new relief laws have appropriated additional relief funds and as the federal government has obligated and expended those funds (see fig. 7).

Figure 7: Percentage of COVID-19 Relief Appropriations Obligated and Expended, July 31, 2020–Aug. 31, 2021

Notes: The percentages shown represent the portions of appropriated funds available as of each date shown that had been obligated and expended. An appropriation provides legal authority for federal agencies to incur obligations and make payments out of the U.S. Treasury for specified purposes. Appropriation amounts are based on appropriation warrant information provided by the Department of the Treasury as of July 31, 2020; September 30, 2020; November 30, 2020; January 31, 2021; May 31, 2021; June 30, 2021; July 31, 2021; and August 31, 2021, for the six COVID-19 relief laws, four of which were enacted before July 2020. These amounts have increased over time and could increase in the future for programs with indefinite appropriations (i.e., appropriations that, at the time of enactment, are for an unspecified amount).
An obligation is a definite commitment that creates a legal liability of the U.S. government for the payment of goods and services ordered or received, or a legal duty on the part of the U.S. government that could mature into a legal liability by virtue of actions on the part of another party that are beyond the control of the U.S. government. An expenditure is the actual spending of money, or an outlay. Expenditures reflected in the percentages shown include some estimates, such as estimated subsidy costs for direct loans and loan guarantees. Increased spending in Medicaid and Medicare is not accounted for in the appropriations provided by the COVID-19 relief laws. Under Office of Management and Budget guidance, federal agencies were not directed to report COVID-19 related obligations and expenditures until July 2020.

The nine major spending areas shown in table 1 represent $3.9 trillion, or 81 percent, of the total amounts appropriated. For these nine spending areas, agencies reported obligations totaling $3.3 trillion and expenditures totaling $3.0 trillion as of August 31, 2021. Table 1 provides additional details on appropriations, obligations, and expenditures of government-wide COVID-19 relief funds, including the nine major spending areas as of August 31, 2021.
Table 1: COVID-19 Relief Appropriations, Obligations, and Expenditures, as of Aug. 31, 2021

Major spending areaa

Total appropriationsb
($ in billions)

Total obligationsc
($ in billions)

Total expendituresc
($ in billions)

Unemployment Insurance
(Department of Labor)

858.6

660.3

650.2

Economic Impact Payments
(Department of the Treasury)

855.3

841.6

841.6

Business Loan Programs
(Small Business Administration)

838.0

829.2

827.6d

Public Health and Social Services Emergency Fund
(Department of Health and Human Services)

350.1

240.0

172.1

Coronavirus State and Local Fiscal Recovery Funds
(Department of the Treasury)

350.0

239.8

239.8

Education Stabilization Fund
(Department of Education)

278.6

257.0

51.7

Coronavirus Relief Fund
(Department of the Treasury)

150.0

149.9

149.9

Disaster Relief Fund
(Department of Homeland Security)e

97.0

63.8

9.9

Supplemental Nutrition Assistance Programs
(Department of Agriculture)

91.7

66.1

64.6

Other areasf

881.6

532.4

391.9

Totalg

4,750.9

3,880.1

3,399.3
Source: GAO analysis of data from the Department of the Treasury and applicable agencies. | GAO-22-105051

aMajor spending areas shown are based on federal accounts in Treasury’s Governmentwide Treasury Account Symbol Adjusted Trial Balance System. Each spending area may include multiple programs.
bCOVID-19 relief appropriations shown reflect amounts appropriated under the American Rescue Plan Act of 2021 (ARPA), Pub. L. No. 117-2, 135 Stat. 4; Consolidated Appropriations Act, 2021, Pub. L. No. 116-260, 134 Stat. 1182 (2020); Paycheck Protection Program and Health Care Enhancement Act, Pub. L. No. 116-139, 134 Stat. 620 (2020); CARES Act, Pub. L. No. 116-136, 134 Stat. 281 (2020); Families First Coronavirus Response Act, Pub. L. No. 116-127, 134 Stat. 178 (2020); and Coronavirus Preparedness and Response Supplemental Appropriations Act, 2020, Pub. L. No. 116-123, 134 Stat. 146. These amounts are based on appropriation warrant information provided by Treasury as of August 31, 2021. These amounts have increased over time and could increase in the future for programs with indefinite appropriations, which are appropriations that, at the time of enactment, are for an unspecified amount. The amounts shown do not include transfers of funds that federal agencies may make between appropriation accounts or transfers of funds they may make to other agencies.
cObligation and expenditure data shown are based on data reported by applicable agencies. An obligation is a definite commitment that creates a legal liability of the U.S. government for the payment of goods and services ordered or received, or a legal duty on the part of the U.S. government that could mature into a legal liability by virtue of actions on the part of another party that are beyond the control of the U.S. government. An expenditure is the actual spending of money, or an outlay. Expenditures shown include some estimates, such as estimated subsidy costs for direct loans and loan guarantees.
dThe Small Business Administration’s Business Loan Program account includes activity for the Paycheck Protection Program loan guarantees and certain other loan subsidies. These expenditures relate mostly to the loan subsidy costs (i.e., the loan’s estimated long-term costs to the U.S. government).
eAppropriations to the Disaster Relief Fund are generally not specific to individual disasters. Therefore, Treasury’s methodology for determining COVID-19-related obligations and expenditures does not capture obligations and expenditures for the COVID-19 response based on appropriations other than those in the COVID-19 relief laws. Further, Treasury’s methodology includes all obligations and expenditures based on appropriations in the COVID-19 relief laws, including those for other disasters. In its Disaster Relief Fund Monthly Report dated September 9, 2021, the Department of Homeland Security reported COVID-19-related obligations totaling $80.0 billion and expenditures totaling $60.6 billion as of August 31, 2021.
fSeveral provisions in the Families First Coronavirus Response Act and ARPA authorized increases in Medicaid payments to states and U.S. territories. The Congressional Budget Office estimated that federal expenditures from these provisions would be approximately $76.9 billion through fiscal year 2030. The largest increase to federal Medicaid spending is based on a temporary formula change rather than a specific appropriated amount. Some of the estimated costs in this total are for the Children’s Health Insurance Program, permanent changes to Medicaid, and changes not specifically related to COVID-19. This increased spending is not accounted for in the appropriations provided by the COVID-19 relief laws and therefore not included in this table.
gBecause of rounding, amounts shown in columns may not sum to the totals.

The COVID-19 relief laws provided more than $1 trillion to federal agencies to provide assistance related to the COVID-19 pandemic to states, the District of Columbia, localities, U.S. territories, and tribes through existing and newly created programs and funds.[24] Table 2 lists programs and funds that each received $10 billion or more—exclusively or primarily for states, the District of Columbia, localities, U.S. territories, and tribes—in at least one of the six laws. It also provides obligations and expenditures for these programs and funds as of August 31, 2021.
Table 2: Appropriations, Obligations, and Expenditures for Federal Programs and Funds Receiving $10 Billion or More in COVID-19-Related Aid for States, the District of Columbia, Localities, U.S. Territories, and Tribes, as of Aug. 31, 2021

Program fund/description

Appropriations
($ in billions)

Obligations
($ in billions)

Expenditures
($ in billions)

Coronavirus State and Local Fiscal Recovery Funds
Administered by the Department of the Treasury, these funds provide payments to states, the District of Columbia (D.C.), U.S. territories, tribal governments, and localities to mitigate the fiscal effects stemming from the COVID-19 pandemic, among other things.

350

239.8

239.8

Elementary and Secondary School Emergency Relief Fund
Administered by the Department of Education, this fund generally provides formula grants to states (including D.C. and Puerto Rico) for education-related needs to address the impact of the COVID-19 pandemic.

190.3

172.3

17.3

Coronavirus Relief Fund
Administered by Treasury, this fund provides payments to states, D.C., localities, U.S. territories, and tribal governments to help offset costs of their response to the COVID-19 pandemic.

150

149.9

149.9

Disaster Relief Fund
Administered by the Federal Emergency Management Agency, this fund provides federal disaster recovery assistance for state, local, tribal, and territorial governments when a major disaster occurs.

95a

31.3b

19.6b

Medicaid
Administered by states and U.S. territories according to plans approved by the Centers for Medicare & Medicaid Services, which oversees Medicaid at the federal level. This program finances health care for certain low-income and medically needy individuals through federal matching of states’ and U.S. territories’ health care expenditures. The Families First Coronavirus Response Act and American Rescue Plan Act of 2021 temporarily increased federal Medicaid matching rates under specified circumstances, among other changes.

76.9c

50.9d

50.9d

Transit grants
Administered by the Federal Transit Administration, these funds are distributed through existing grant programs to provide assistance to states, localities, U.S. territories, and tribes to prevent, prepare for, and respond to the COVID-19 pandemic.

69.5

37.0

22.8

Child Care and Development Fund
Administered by the Department of Health and Human Services (HHS), this program provides funds to states, D.C., territories, and tribes to subsidize the cost of child care for low-income families. COVID relief funds have supported assistance to health care and other essential workers without regard to income eligibility requirements. Additional child care stabilization funding was provided for subgrants to eligible child care providers to support the stability of the child care sector during and after the COVID-19 pandemic.e

52.5

52.4

7.0

Emergency Rental Assistance
Administered by Treasury, this program provides grants to states, D.C., U.S. territories, localities, and tribes to provide assistance to eligible households for rent and utility payments.

46.6

33.2

33.2f

Public Health and Social Services Emergency Fund
Administered by HHS, this fund provides for grants to states, U.S. territories, localities, and tribal governments to support COVID-19 testing, surveillance, and contact tracing, among other uses.

33.4

30.3

7.7

Airport grants
Administered by the Federal Aviation Administration, these grants provide funds for eligible airports to prevent, prepare for, and respond to the effects of the COVID-19 pandemic.g

20

15.8h

7.7h

Highway infrastructure programs
Administered by the Federal Highway Administration, these programs provide funds to states, D.C., U.S. territories, and tribes for highway construction and authorize the use of these funds for maintenance, personnel, and other purposes to prevent, prepare for, and respond to the COVID-19 pandemic.

10

3.9h

1.5h

Coronavirus Capital Projects Fund
Administered by Treasury, this fund provides payments to states, D.C., U.S. territories, and tribal governments for critical capital projects that directly enable work, education, and health monitoring in response to the COVID-19 pandemic.i

10

0

0

State Small Business Credit Initiative
Administered by Treasury, this program provides funds to states, D.C., U.S. territories, tribal governments, and eligible localities to fund small business credit support and investment programs.j

10

0

0
Source: GAO analysis of federal laws, data from the Congressional Budget Office, and obligations and expenditures data from Treasury and applicable agencies. | GAO-22-105051

Notes: The COVID-19 relief laws providing the appropriations shown are the American Rescue Plan Act of 2021 (ARPA), Pub. L. No. 117-2, 135 Stat. 4 (2021), the Consolidated Appropriations Act, 2021, Pub. L. No. 116-260, div. M and N, 134 Stat. 1182 (2020), the Paycheck Protection Program and Health Care Enhancement Act, Pub. L. No. 116-139, 134 Stat. 620 (2020), the CARES Act, Pub. L. No. 116-136, 134 Stat. 281 (2020), and the Families First Coronavirus Response Act, Pub. L. No. 116-127, 134 Stat. 178 (2020). The Coronavirus Preparedness and Response Supplemental Appropriations Act, 2020 did not provide any specified amounts for these programs or funds for states, D.C., localities, territories, or tribes. The amounts shown are the cumulative amounts for each program or fund under the other five laws. Some appropriation amounts include an amount available for administration expenses or for the relevant inspectors general. Numbers are rounded to the nearest hundred million.
We did not independently verify obligations and expenditures amounts.
aAppropriations for the Disaster Relief Fund generally are not specific to individual disasters and may be used for various disaster assistance programs, including the Public Assistance program, which provides assistance to state, local, territorial, and tribal governments.
bThe obligations and expenditures listed in the table are for the Public Assistance program for the COVID-19 response.
cSeveral provisions in the Families First Coronavirus Response Act and ARPA authorized increases in Medicaid payments to states and U.S. territories. The Congressional Budget Office estimated that federal expenditures from these provisions would be approximately $76.9 billion through fiscal year 2030. The largest increase to federal Medicaid spending is based on a temporary funding formula change rather than a specific appropriated amount. Some of the estimated costs in this total are for the Children’s Health Insurance Program, permanent changes to Medicaid, and changes not specifically related to COVID-19.
dMedicaid obligations and expenditures are as of June 30, 2021. COVID-19 related obligation and expenditure amounts for Medicaid only reflect provisions in the Families First Coronavirus Response Act. Obligation and expenditure amounts for COVID-19 related Medicaid provisions in the American Rescue Plan Act are not currently available from the Centers for Medicare & Medicaid Services.
eThe Child Care and Development Fund is made up of two funding streams: mandatory and matching funding authorized under section 418 of the Social Security Act, and discretionary funding authorized under the Child Care and Development Block Grant Act of 1990, as amended. See 42 U.S.C. §§ 618 and 9858m.
fExpenditures represent funding disbursed to grantees by Treasury for distribution to renters, landlords, and utility providers. As of August 31, 2021, grantees had spent about $7.7 billion of these amounts. For additional information on grantee spending, see the enclosure on the Emergency Rental Assistance program in appendix I.
gFunds are available to eligible sponsors of airports. Nearly all of these airports are under city, state, county, or public-authority ownership.
hObligations and expenditures for these funds are as of August 30, 2021.
iTreasury issued implementing guidance in September 2021 that provides that the application deadline for requesting allocations of the Coronavirus Capital Projects Fund from Treasury is (1) December 27, 2021, for states, D.C., and U.S. territories; and (2) June 1, 2022, for tribal governments.
jStates, the District of Columbia, territories, and tribal governments must initiate applications for the State Small Business Credit Initiative program with Treasury by December 11, 2021. Eligible jurisdictions must submit completed applications by February 11, 2022.

Executive Summary 

Overview

As the nation continues to respond to the pandemic and significant increases in COVID-19 cases from the Delta variant, this report provides key updates on the government’s pandemic response and makes 16 new recommendations aimed at improving the accountability and program effectiveness of the federal response.

In our prior CARES Act reports and other targeted COVID-19-related reports, we have made a total of 209 recommendations to federal agencies.[25] As of September 30, 2021, agencies had fully addressed 33 of these recommendations, resulting in improvements including increased oversight of relief payments to individuals and improved transparency of decision making for emergency use authorizations for vaccines and therapeutics. Agencies have also partially addressed an additional 48 recommendations. Fully addressing our previous recommendations as well as the new recommendations we are making will enhance the transparency and accountability of the federal government’s response to and recovery from the COVID-19 pandemic.

Relief for Health Care Providers

To respond to the pandemic, $178 billion has been appropriated to the Provider Relief Fund (PRF) to reimburse eligible providers for health care-related expenses or lost revenues attributable to COVID-19. As of August 31, 2021, HHS had allocated about $153.9 billion. Of the $153.9 billion allocated, HHS had disbursed about $132.5 billion and about $21.5 billion remained to be disbursed. Approximately $24.1 billion of PRF funds remained unallocated and undisbursed as of August 31, 2021. On September 10, 2021, HHS announced that $17 billion of the previously unallocated $24.1 billion would be allocated for a general distribution to a broad range of providers who could document COVID-related revenue loss and expenses. HHS expected to begin disbursing these funds in December 2021.

The Health Resources and Services Administration (HRSA) has taken some oversight actions regarding post-payment reviews of PRF payments and recovery of identified overpayments; however, it has not established key next steps. While the agency has conducted post-payment reviews for certain priority types of provider payments, it has not established time frames for implementing and completing all remaining post-payment reviews or set review schedules beyond the first quarter of calendar year 2022. In regards to recovery of identified overpayments, the agency has yet to recover most of the overpayments that had been identified as of September 2021. HRSA officials stated they had plans for recovering overpayments, but had not finalized procedures for doing so.

Without timely post-payment oversight that includes time frames for conducting reviews to help ensure that relief payments are made only to eligible providers in correct amounts and to identify unused payments or payments not properly used, HHS cannot fully address its stated payment integrity risks for the PRF and seek to recover overpayments, unused payments, or payments not properly used. Moreover, setting time frames for completion of these oversight efforts can help the agency achieve its objectives and increase the likelihood of recovering funds.

We are recommending that the Administrator of the Health Resources and Services Administration take several steps to finalize and implement post-payment oversight. Specifically, the Administrator should establish time frames for completing post-payment reviews to promptly address identified risks and identify overpayments made from the Provider Relief Fund, such as payments made in incorrect amounts or payments to ineligible providers. The Administrator should also finalize procedures and implement post-payment recovery of any Provider Relief Fund overpayments, unused payments, or payments not properly used. HHS, which includes HRSA, partially agreed with both recommendations. HRSA stated that it has a schedule for reviewing the payment types it initially prioritized, and that reviews for the remaining types and payment recovery efforts will occur in the future. We maintain that establishing time frames for completing reviews and finalizing procedures and implementing recovery efforts expeditiously will help the agency succeed in recovering overpayments.

See the Relief for Health Care Providers enclosure in appendix I for more information.

Coronavirus State and Local Fiscal Recovery Funds

In March 2021, the American Rescue Plan Act of 2021 (ARPA) appropriated $350 billion to Treasury for the Coronavirus State and Local Fiscal Recovery Funds (CSLFRF).[26] The CSLFRF allocates funds to states, the District of Columbia, localities, tribal governments, and U.S. territories to cover a broad range of costs stemming from the fiscal effects of the COVID-19 pandemic.[27] According to Treasury data, it had distributed approximately $240 billion in CSLFRF funds to recipients as of August 31, 2021.

As of July 2021, some of the 48 states that responded to a GAO survey reported that they had somewhat less than or much less than sufficient capacity to report on use of CSLFRF allocation consistent with federal requirements (17 of 48), to disburse the funds (13 of 48), and to apply appropriate internal controls and respond to inquiries about requirements (10 of 48). In addition, most states (44 of 48) reported that they had taken or planned to take additional steps—such as hiring new staff or reassigning existing staff—to help them manage their CSLFRF allocations.

As of August 2021, Treasury was developing its key internal processes and control activities for the timely monitoring of recipients’ use of their CSLFRF allocations for allowable purposes and for responding, as appropriate, to internal control and compliance findings. According to Treasury officials, the key internal processes and control activities had not been finalized or documented. The officials noted that program development has occurred within a short time frame since the enactment of ARPA in March 2021, and that finalizing and documenting internal processes and control activities for this new program requires time and resources. Further, vacancies in top-level leadership positions in the Office of Recovery Programs, which Treasury established in April 2021, have contributed to uncertainty about how the final program policies and procedures will be implemented.

Until Treasury properly designs and documents policies and procedures to guide CSLFRF program officials and other responsible oversight parties in the Office of Recovery Programs, there is a risk that key control activities needed to help ensure program management fulfills its recipient monitoring and oversight responsibilities may not be established or applied effectively and consistently. This risk may be particularly acute with monitoring state and local recipients that face capacity challenges in managing their CSLFRF allocations in accordance with federal requirements, as some noted in our survey.

We are recommending that the Secretary of the Treasury design and document timely and sufficient policies and procedures for monitoring CSLFRF recipients to provide assurance that recipients are managing their allocations in compliance with laws, regulations, agency guidance, and award terms and conditions, including ensuring that expenditures are made for allowable purposes. Treasury agreed with the recommendation and stated that it is in the process of designing, documenting, and implementing a risk-based compliance program to monitor recipient use of CSLFRF program funds.

See the Coronavirus State and Local Fiscal Recovery Funds enclosure in appendix I for more information.

Unemployment Insurance Fraud Risk Management

Federal and state entities continue to investigate and report on high levels of fraud, potential fraud, and fraud risks in the unemployment insurance (UI) programs overseen at the federal level by the Department of Labor (DOL). For example, in June 2021, DOL’s Office of Inspector General reported that it had identified nearly $8 billion in potentially fraudulent UI benefits paid from March 2020 through October 2020. In addition, from March 2020 through July 2021, 71 individuals pleaded guilty to federal charges of defrauding UI programs, and federal charges were pending against 192 individuals.

In addition to a substantial increase in fraudulent and potentially fraudulent activity in UI programs, DOL officials stated that the types of fraud observed during the pandemic differed from historical UI fraud risks and schemes observed before the pandemic. While DOL continues to identify and implement strategies to address potential unemployment insurance fraud and has ongoing program integrity activities to identify risks, it has not comprehensively assessed fraud risks in alignment with leading practices identified in our Fraud Risk Framework, which by law must be incorporated into guidelines established by the Office of Management and Budget for agencies.

First, DOL has not clearly assigned defined responsibilities to a dedicated entity for designing and overseeing fraud risk management activities such as managing the fraud risk assessment process. Without a dedicated entity with defined responsibilities to lead antifraud initiatives, including the process of assessing fraud risks to UI programs, DOL may not be strategically managing UI fraud risks. For example, a dedicated antifraud entity could, among other activities, manage the fraud risk assessment process and coordinate antifraud initiatives across an agency’s various programs to assure that agency activities called for by the Fraud Risk Framework are conducted.

We are recommending that the Secretary of Labor designate a dedicated entity and document its responsibilities for managing the process of assessing fraud risks to the unemployment insurance program, consistent with leading practices as provided in our Fraud Risk Framework. This entity should have, among other things, clearly defined and documented responsibilities and authority for managing fraud risk assessments and for facilitating communication among stakeholders regarding fraud-related issues. DOL neither agreed nor disagreed with this recommendation. DOL stated that the department’s Chief Financial Officer and the Employment and Training Administration’s Assistant Secretary are the designated senior executive officials responsible for risk assessment and management of the UI program. While this approach may incorporate the roles and responsibilities of a dedicated antifraud entity, it is important that, consistent with our Fraud Risk Framework, DOL clearly document this designation and these senior staff members’ antifraud responsibilities.

Second, DOL has not comprehensively assessed UI fraud risks in alignment with leading practices or documented a prioritized approach to managing fraud risks. Our Fraud Risk Framework calls for federal managers to plan regular fraud risk assessments and determine a fraud risk profile. Specifically, the fraud risk assessment should be tailored to the program and conducted at regular intervals as well as when there are changes to the program or operating environment, such as for program operations and expansions during emergencies.

Without comprehensively assessing UI fraud risks, DOL lacks reasonable assurance that it has identified the most significant fraud risks for the regular UI program that will exist after the pandemic. For example, some fraud risks identified in the CARES Act UI programs may continue to exist in the regular UI program after the temporary UI programs expire. An analysis of fraud risks across all UI programs would also help DOL determine whether additional fraud controls are needed for the regular UI program and could position DOL to deal more effectively with any future emergency UI programs.

We are also recommending that the Secretary of Labor (1) identify inherent fraud risks facing the unemployment insurance program; (2) assess the likelihood and impact of inherent fraud risks facing the program; (3) determine fraud risk tolerance for the program; (4) examine the suitability of existing fraud controls in the program and prioritize residual fraud risks; and (5) document the fraud risk profile for the program. DOL neither agreed nor disagreed with this recommendation. DOL said its current process allows it to identify, evaluate, and manage risks. However, DOL also said it will incorporate the recommended practices and approaches moving forward.

See the Unemployment Insurance Fraud Risk Management enclosure in appendix I for more information.

FEMA’s Disaster Relief Fund and Assistance to State, Local, Tribal, and Territorial Governments

The Federal Emergency Management Agency (FEMA) is using the Disaster Relief Fund to respond to the COVID-19 pandemic, which is the first time the fund has been used during a nationwide public health emergency.[28] For example, FEMA’s Public Assistance Program helps state, local, tribal, and territorial governments, and certain types of private nonprofit organizations respond to and recover from major disasters or emergencies. From September 1, 2020, to August 31, 2021, FEMA obligated a total of approximately $26.8 billion to Public Assistance projects for emergency protective measures, such as eligible medical care, the purchase and distribution of food, and distribution of personal protective equipment.

We found that FEMA inconsistently interpreted and applied its policies for expenses eligible for COVID-19 Public Assistance within and across its 10 regions. For example, officials in one state said that, at one point, FEMA had deemed the provision of personal protective equipment at correctional facilities as ineligible for reimbursement in their region but that states in other regions had received reimbursement for the same expense.

We identified four key areas that contributed to the inconsistent interpretation and application of COVID-19 policies for Public Assistance based on our discussions with FEMA headquarters officials and state emergency managers. These four areas are (1) changes in policy that were interpreted and applied differently by FEMA personnel as FEMA used the Public Assistance Program for the first time to respond to a nationwide emergency; (2) delegation of authority to FEMA regions for making final application eligibility determinations; (3) lack of required training on COVID-19 policies for staff handling Public Assistance applications; and (4) variation in the experience level of staff making eligibility determinations for applications. FEMA officials stated that it has been difficult to ensure consistency in policies as different states and regions are not experiencing the same things at the same time.

FEMA officials have acknowledged that in spite of efforts to ensure consistency in interpretation and application of its Public Assistance COVID-19 policy, inconsistent interpretation and application of its policy continue to occur within and across regions. Given the current rise in the COVID-19 Delta variant across the nation, FEMA is likely to receive applications for reimbursement for a larger number of projects than it estimated earlier in 2021.

We are recommending that the Federal Emergency Management Agency Administrator improve the consistency of the agency’s interpretation and application of the COVID-19 Public Assistance policy within and across regions by further clarifying and communicating eligibility requirements nationwide.

We are also recommending that the Federal Emergency Management Agency Administrator require the agency’s Public Assistance program employees in the regions and at its Consolidated Resource Centers to attend training on changes to COVID-19 Public Assistance policy to help ensure it is interpreted and applied consistently nationwide.

The Department of Homeland Security agreed with both recommendations and outlined actions it has taken to improve the consistency of its interpretation and application of COVID-19 Public Assistance policy and to train employees in the regions and at its Consolidated Resource Centers.

Loans for Aviation and Other Eligible Businesses

Treasury has executed 35 loan agreements with certain aviation businesses and other businesses deemed critical to maintaining national security (national security businesses).[29] These loans have totaled about $22 billion of the $46 billion authorized by the CARES Act for loans and loan guarantees. Of these 35 loans, as of October 1, 2021, 10 loans had been fully repaid and the total value of outstanding loans was about $1.1 billion.

As directed by the CARES Act, Treasury required certain loan recipients to provide financial assets, such as warrants—an option to buy shares of stock at a predetermined price before a specified date—which give the federal government the ability to protect taxpayer interests. In addition, the CARES Act provided that for the primary benefit of taxpayers Treasury may sell, exercise, or surrender financial instruments it obtained. Treasury received warrants from nine businesses equal to 10 percent of the total loan amount drawn. Treasury has not exercised any of the warrants for stock it holds in these nine businesses.

According to Treasury officials, it is likely that—if the airline industry continues to recover and borrowers do not default—the warrants could have higher values than the predetermined price Treasury would have to pay to act on them. For example, based on the stock price at market close on October 1, 2021, its warrants from one borrower would be valued at 159 percent above the initial value at which Treasury received them. However, Treasury has not developed policies and procedures to guide when to act on the warrants to benefit the taxpayer.

We are recommending that the Secretary of the Treasury develop policies and procedures to determine when to act on warrants obtained as part of the loan program for aviation and other eligible businesses to benefit the taxpayers. Treasury agreed with our recommendation and said it is in the process of creating a policy that will allow it to evaluate when and how to act to dispose of the warrants obtained as part of the loan program.

See the Loans for Aviation and Other Eligible Business enclosure in appendix I for more information.

Payroll Support Assistance to Aviation Businesses

As of September 2021, Treasury had made $59 billion in payments out of $63 billion provided to the Payroll Support Program to support aviation business.[30] These payments, made to air carriers and aviation contractors, were to be used exclusively for the continuation of wages, salaries, and benefits.

Similar to Treasury’s loan program for aviation and other businesses described above, the CARES Act allowed the department to receive financial instruments from these businesses to provide appropriate compensation to the federal government for providing the financial assistance, and Treasury required 14 recipients to provide warrants. These 14 recipients provided a total of 58 million warrants.

As Treasury continues to hold these warrants for stock purchases—and as the airline industry recovers—these warrants may increase in value. Treasury has not exercised any of the warrants for stock it holds in the 14 businesses, nor has the agency documented policies and procedures to guide when to act on the warrants to provide appropriate compensation to the federal government.

We are recommending that the Secretary of the Treasury develop policies and procedures to determine when to act on warrants obtained as part of the Payroll Support Program to provide appropriate compensation to the federal government. Treasury agreed with our recommendation and said it is in the process of creating a policy that will allow it to evaluate when and how to act to dispose of the warrants obtained as part of the Payroll Support Program.

See the Payroll Support Assistance to Aviation Businesses enclosure in appendix I for more information.

COVID-19 Testing

Antigen tests are one of two types of COVID-19 diagnostic and screening tests for which FDA has issued emergency use authorizations. These “rapid” tests typically have a turnaround time of about 30 minutes or less for results. Antigen tests can be conducted in doctors’ offices, pharmacies, and other health care settings, as well as in homes or other non-health care settings; some antigen tests can be conducted without a prescription. The second type of COVID-19 tests, molecular tests—which are considered the “gold standard” for diagnostic testing—typically have a 1–3 day turnaround period, mainly due to the time needed to send a sample to the laboratory, according to FDA officials.

The use of antigen testing is increasing. According to HHS data, the number of reported antigen tests per month increased from about 50,000 in June 2020 to nearly 12 million in August 2021. As a percentage of total tests reported, antigen tests increased from less than 1 percent in June 2020 to over 20 percent of all tests reported in July and August 2021. In addition, on September 9, 2021, the administration announced the “Path Out of the Pandemic” plan, which should further increase the use of antigen tests for COVID-19.

Since June 2020, HHS and its component agencies and testing-related working groups have worked to encourage and improve the reporting of antigen testing data to local, state, and federal health officials. However, HHS officials told us that limited reporting of antigen test results prevents HHS from using antigen testing data for COVID-19 surveillance.

HHS is taking additional steps aimed at improving reporting of antigen test data and exploring additional approaches for effective COVID-19 surveillance. For example, officials told us that HHS will continue to work with test manufacturers and make enhancements to data reporting by building reporting methods into the testing process and emphasizing reporting from specific settings, such as schools. HHS is also considering surveillance approaches to supplement or enhance current surveillance efforts. For example, HHS is exploring wastewater surveillance approaches, which provide data that can complement and confirm other forms of surveillance for COVID-19, and an efficient pooled community sample that is particularly useful in areas where timely COVID-19 clinical testing is underutilized or unavailable, according to HHS officials.

See the COVID-19 Testing enclosure in appendix I for more information.

Worker Safety and Health

The Occupational Safety and Health Administration (OSHA) is responsible for setting and enforcing workplace safety and health standards for the private sector in 29 states, the District of Columbia, and four territories. The other 21 states and Puerto Rico set and enforce their own workplace safety and health standards for private sector and state and local government employers under state plans approved by OSHA.

During the first 15 months of the pandemic, OSHA primarily relied on existing workplace safety and health standards and voluntary employer guidance for its enforcement. However, until June 2021, OSHA standards did not contain provisions specifically targeted at the COVID-19 hazard. As a result, OSHA inspectors faced challenges in applying OSHA requirements to COVID-19 cases.

OSHA took steps to help protect employees in high-risk industries from the hazard of COVID-19 by initiating a 1-year COVID-19 National Emphasis Program in March 2021 and issuing an emergency temporary standard in June 2021.[31] Although the emergency temporary standard covers only employers in the health care industry, in its other policies, OSHA has acknowledged the potential for high risk of workplace COVID-19 exposure in industries beyond health care. The agency is engaged in rulemaking on two standards: the June 2021 COVID-19 health-care emergency temporary standard and a separate infectious disease standard.

OSHA area offices faced challenges in enforcing workplace safety and health standards during the COVID-19 pandemic, but the agency has not assessed lessons learned or promising practices. According to inspectors from area offices, resource challenges included managing a high volume of incoming reports and working in a telework environment. Communication and guidance challenges for inspectors included a lack of timely guidance from OSHA headquarters and difficulty finding and using the most up-to-date guidance.

We are recommending that the Assistant Secretary of Labor for Occupational Safety and Health assess—as soon as feasible and, as appropriate, periodically thereafter—various challenges related to resources and to communication and guidance that the Occupational Safety and Health Administration has faced in its response to the COVID-19 pandemic and take related actions as warranted.

DOL partially agreed with our recommendation. DOL stated that it agrees that it is important to assess lessons learned and best practices for OSHA’s operational response to COVID-19. However, DOL officials said they believe that while the pandemic is ongoing, the agency’s resources are best used to help employers and workers mitigate exposures to COVID-19. Because it is unclear when the COVID-19 pandemic will end, we maintain that assessing—as soon as feasible—the challenges that OSHA faced in responding to the pandemic, and taking related actions, would enable the agency to improve its enforcement efforts during this pandemic and help it prepare for operations during any future pandemic.

See the Worker Safety and Health enclosure in appendix I for more information.

Advance Child Tax Credit Payments

ARPA made several temporary changes to the child tax credit (CTC). First, it temporarily expanded eligibility to additional qualified individuals by eliminating the earned income requirement to receive the CTC.[32] Second, it temporarily increased the maximum amount of the CTC from $2,000 per qualifying child to $3,000 or $3,600, depending on the child’s age.[33] As required by ARPA, the Internal Revenue Service (IRS) and Treasury are responsible for issuing half of the CTC through periodic advance payments (advance CTC).[34] IRS reported that as of September 25, 2021, it had disbursed more than 106 million advance payments totaling over $45.5 billion.

IRS is conducting several outreach efforts to increase the public’s awareness of advance CTC payments. For example, IRS continues to coordinate with community organizations to raise awareness of the advance CTC payments. IRS is also planning to include advance CTC messaging for the 2022 tax filing season in its annual Get Ready campaign, which IRS officials said typically begins in November.

However, IRS and Treasury have not developed a comprehensive estimate of individuals who are potentially eligible for advance CTC payments and have not set a participation goal. An eligibility estimate and participation rate, including individuals who have opted in and out of the advance CTC payments, would provide greater clarity about which populations may be at risk of not receiving the payments. These populations would benefit from targeted outreach and communications to learn more about the payments and how to claim the advance CTC during the 2022 filing season. Moreover, this information could inform IRS’s administration of other refundable tax credits as well as any future changes to the CTC that Congress is considering.

We are recommending that the Secretary of the Treasury, in coordination with the Commissioner of Internal Revenue, estimate the number of individuals, including nonfilers, who are eligible for advance child tax credit payments, measure the 2021 participation rate based on that estimate, and use that estimate to develop targeted outreach and communications efforts for the 2022 filing season; the participation rate could include individuals who opt in and out of the advance payments. Treasury neither agreed nor disagreed with this recommendation. Treasury stated that it supports the goal of the recommendation but has not estimated the eligible population for the advance CTC. Treasury also stated that it and IRS continue to undertake advance CTC outreach, education, and media campaign efforts. We maintain that without a comprehensive estimate of eligibility and a participation rate, which includes more nonfilers, Treasury and IRS are missing an opportunity to assess the effectiveness of their outreach efforts in reaching nonfilers who are more likely experiencing poverty or hardship and may be more in need of the CTC payments.

See the Advance Child Tax Credit and Economic Impact Payments enclosure in appendix I for more information.

Child Nutrition

Child nutrition programs administered by the Department of Agriculture’s (USDA) Food and Nutrition Service (FNS) supply cash reimbursements to schools or other programs for meals and snacks provided to eligible children nationwide. In fiscal year 2019, before the pandemic, the four largest programs—the National School Lunch Program, School Breakfast Program, Summer Food Service Program, and Child and Adult Care Food Program—along with other child nutrition programs, received $23.1 billion in federal funds. During a typical year, two of these programs, the National School Lunch Program and the School Breakfast Program, subsidize meals for nearly 30 million children in approximately 95,000 elementary and secondary schools nationwide.

Various COVID-19 relief laws have provided funding or authority to USDA to support child nutrition programs during the pandemic. For example, the Families First Coronavirus Response Act granted FNS authority to issue nationwide waivers in certain programs.[35] These waivers are intended to support access to nutritious meals, reduce the administrative burden associated with eligibility determinations, and minimize potential exposure to COVID-19.

Agencies can leverage lessons learned from an event to inform future efforts and limit the chance of recurring challenges. According to FNS officials, FNS is primarily using the existing FNS School Meals Operations study to gather information about lessons learned during the pandemic for child nutrition programs. The study, launched in spring 2021, will collect administrative and survey data on each of the four child nutrition programs from state agencies and will collect survey data from school district nutrition programs. However, as of July 2021, FNS was unable to provide us with a plan showing how FNS intends to comprehensively analyze lessons learned from the pandemic for child nutrition programs, such as from operational and financial challenges.

Although FNS is collecting some information on these topics from states and school districts, without documenting its plan for analyzing lessons learned from the pandemic, FNS may miss opportunities to comprehensively identify lessons learned. Further, according to FNS officials, while the School Meals Operations study will survey state agencies that administer the federal child nutrition programs, the study will not gather local perspectives directly from child care centers and day care homes or from other local program sponsors that are not school districts. Without gathering perspectives from a full range of meal program operators—rather than only from state agencies and school districts––FNS will lack comprehensive information to aid its future planning.

We are recommending that the Secretary of Agriculture document the department’s plan to analyze lessons learned from operating child nutrition programs during the COVID-19 pandemic. This plan should include a description of how the department will gather perspectives of key stakeholders, such as Child and Adult Care Food Program institutions and nonschool Summer Food Service Program sponsors. The Department of Agriculture generally agreed with this recommendation.

See the Child Nutrition enclosure in appendix I for more information.

Conclusions 


The federal government’s efforts to respond to and recover from COVID-19 continue. The spread of the Delta variant in the U.S. this summer—and the subsequent rise in cases and hospitalizations—illustrates the challenges to the nation’s response and recovery efforts and the work that remains. We are pleased that agencies have fully addressed 33 and partially addressed 48 of our 209 recommendations. Fully implementing our recommendations, including the new recommendations we are making in this report, can help improve the federal response and recovery efforts.

Closing 


We are sending copies of this report to the appropriate congressional committees, the Office of Management and Budget, and other relevant agencies. In addition, the report is available at no charge on the GAO website at https://www.gao.gov.

If you or your staff have any questions about this report, please contact me at (202) 512-5500 or dodarog@gao.gov. Questions can also be directed to Orice Williams Brown, Chief Operating Officer, at (202) 512-5600; Jessica Farb, Managing Director, Health Care, at (202) 512-7114 or farbj@gao.gov; or A. Nicole Clowers, Managing Director, Congressional Relations, at (202) 512-4400 or clowersa@gao.gov. Contact points for our Offices of Congressional Relations and Public Affairs may be found on the last page of this report.

Gene L. Dodaro

Comptroller General of the United States

Congressional Addressees

The Honorable Patrick Leahy
Chairman
The Honorable Richard Shelby
Vice Chairman
Committee on Appropriations
United States Senate

The Honorable Ron Wyden
Chairman
The Honorable Mike Crapo
Ranking Member
Committee on Finance
United States Senate

The Honorable Patty Murray
Chair
The Honorable Richard Burr
Ranking Member
Committee on Health, Education, Labor, and Pensions
United States Senate

The Honorable Gary C. Peters
Chairman
The Honorable Rob Portman
Ranking Member
Committee on Homeland Security and Governmental Affairs
United States Senate

The Honorable Rosa L. DeLauro
Chair
The Honorable Kay Granger
Ranking Member
Committee on Appropriations
House of Representatives

The Honorable Frank Pallone, Jr.
Chairman
The Honorable Cathy McMorris Rodgers
Republican Leader
Committee on Energy and Commerce
House of Representatives

The Honorable Bennie G. Thompson
Chairman
The Honorable John Katko
Ranking Member
Committee on Homeland Security
House of Representatives

The Honorable Carolyn B. Maloney
Chairwoman
The Honorable James Comer
Ranking Member
Committee on Oversight and Reform
House of Representatives

The Honorable Richard Neal
Chairman
The Honorable Kevin Brady
Republican Leader
Committee on Ways and Means
House of Representatives

Appendixes and Enclosures 


IN THIS SECTION


Appendix I: Enclosures

Economic Indicators

Based on data available in early October 2021, the national economy has continued to recover from the COVID-19 pandemic, and areas of the economy we are monitoring saw some improvement in recent months. Indicators for labor markets, household finances, and small business credit conditions improved in June and July 2021, with notable gains in leisure and hospitality and state and local government employment, while the labor market recovery slowed in August 2021 and state and local government employment fell in September 2021 (see table).[36]

Indicators for Areas of the Economy Supported by the Federal COVID-19 Pandemic Response, June–Sept. 2021, Cumulative Changes since Feb. 2020

aThe employment-to-population ratio represents the number of employed people as a percentage of the civilian noninstitutional population 16 years and over. The ratio is subject to a misclassification error with respect to identifying workers as employed and absent from work who are likely unemployed on temporary layoff.
bState and local government and leisure and hospitality employment data from August and September 2021 are preliminary.
cHigher levels in the Consumer Credit Default Composite Index rate indicate more defaults on consumer loans, including auto loans, bank cards, and mortgages. The Consumer Credit Default Composite Index could be subject to seasonal variation but is not seasonally adjusted.
dSeriously delinquent loans are 3 months or more past due or in foreclosure, based on mortgages insured by the Federal Housing Administration (FHA). Increases in serious delinquency rates on FHA loans could, to some extent, reflect borrowers taking advantage of mortgage forbearance provisions of the CARES Act, but may also indicate financial challenges facing the minority and low- to moderate-income households that disproportionately take out mortgages insured by FHA.
eLower levels of the small business credit card delinquency index indicate more delayed payments on credit. The small business credit card delinquency index is published under license and with permission from Dun & Bradstreet, and no commercial use can be made of these data.

Gross domestic product (GDP) grew at a 6.7 percent annual rate in the second quarter of 2021, and for the first time now exceeds its prepandemic level from the fourth quarter of 2019. The recovery from the pandemic has also been associated with a notable increase in inflation which, should it persist, could cause financial challenges that would be felt most acutely by low-income households. The strength of the economic recovery will continue to depend on the success of public health measures against the COVID-19 pandemic.

Key trends in economic indicators. Federal debt held by the public rose to $22.3 trillion in September 2021 from $22.0 trillion in March 2021, after falling slightly as a share of GDP, from 99.8 percent in the first quarter of 2021 to 98.3 percent of GDP in the second quarter 2021. Interest rates on 3-month Treasury securities were relatively stable, rising to 0.04 percent in September 2021 from 0.02 percent in May 2021. Interest rates on 10-year Treasury securities, in contrast, fell from 1.62 percent to 1.37 percent over the same period. The long-term fiscal challenges facing the U.S. have been exacerbated by the pandemic and will require attention as the economy continues to recover and public health goals are attained, as we reported in March 2021.

Based on monthly and weekly data from the Department of Labor, the labor market showed improvement in June, July, August, and September 2021 but remained worse relative to the prepandemic period. Although weekly initial unemployment insurance claims generally declined through September 2021, initial claims remain high compared to the prepandemic period (see the Unemployment Insurance Programs enclosure in app. I). The employment-to-population ratio in September 2021 was 58.7 percent, which was 0.2 percentage points higher than the previous month but 2.4 percentage points lower than the prepandemic period (see figure).

Employment-to-Population Ratio, Jan. 2019–Sept. 2021

Changes in employment across sectors continue to reflect the differential impact of the pandemic on various sectors of the economy. For example, some industries that experienced strong gains in employment in the first half of 2021, including leisure and hospitality, experienced slower job growth in August and September 2021 as the Delta variant drove a resurgence in cases in the U.S. Employment in the leisure and hospitality sector is still 9.4 percent lower than it was in February 2020. State and local government employment decreased in September 2021 following months of increases, and employment in these sectors remains 4.3 percent lower than the prepandemic period.

Serious delinquency rates—loans that are 90 or more days past due or in foreclosure—for single-family mortgage loans insured by the Federal Housing Administration (FHA) decreased from March through August 2021, to 8.64 percent of loans, but still remained much higher than rates prior to the pandemic (see figure). FHA loans disproportionately serve minority and low- to moderate-income borrowers, and therefore falling delinquencies may indicate some improvement in the finances of those households in recent months, as well as fewer borrowers relying on mortgage forbearance provisions of the CARES Act.[37] Trends in rent payments among low-income households suggest that these households remain under financial stress as well (see the Emergency Rental Assistance enclosure in app. I).

Serious Delinquency Rates on Single-Family Residential Mortgages, Jan. 2019–Aug. 2021

Note: Seriously delinquent single-family loans are 3 months or more past due or in the foreclosure process. We excluded February 2021 data from the figure because the delinquency rates for February 2021 are likely understated due to late reporting by a large servicer, according to FHA.

Key trends in inflation. Inflation has increased notably in recent months, while measures of underlying inflation pressure and longer-term inflation expectations have been more stable.

Inflation is the increase in the price of goods and services over time, and is typically measured as the percentage change in those prices over a set period, often 1 year.[38] As the prices of goods and services rise, inflation decreases the purchasing power of consumers. That is, inflation decreases the value of currency or other highly liquid assets, like checking accounts; as the prices of goods and services rise, each dollar will buy less. Some level of inflation on average can help promote stable economic conditions, but persistently high levels of inflation can cause financial challenges that are experienced more acutely by certain households. The Federal Reserve System’s Federal Open Market Committee (FOMC) aims for inflation of 2 percent on average over time, and aims to achieve rates of inflation that are above 2 percent for some time after periods in which inflation is persistently below 2 percent.[39]

Higher levels of inflation over short periods—described as transitory—are not unusual and are less cause for concern. The prices of goods and services regularly shift in response to economic changes, and any impact on household finances is more limited because prices increase more rapidly for only a short period of time. In addition, transitory inflation during an economic expansion can also be associated with improving labor market opportunities, including for some low-income and minority workers who could find more stable employment during a long economic expansion.

In contrast, high levels of inflation that persist for long periods are more cause for concern, and can reduce the pace of economic growth.[40] Higher inflation that persists for a longer period can also influence consumers’ and businesses’ expectation of future inflation, which can influence their current behavior. For example, consumers and businesses may make large purchases sooner, increasing current demand and making it more likely that those expectations of future inflation are realized.[41]

We identified a number of indicators of inflation to facilitate ongoing and consistent monitoring of the inflation experience of consumers to help assess the extent to which higher inflation may be transitory or persistent. We included both the Personal Consumption Expenditures (PCE) price index and the Consumer Price Index (CPI) as broad measures of the prices consumers pay for goods and services.[42] We also included the median and trimmed mean CPIs, which are less volatile because they omit both small and large price changes and may provide clearer signals of underlying inflation.[43]

We include two different time periods for each of these inflation measures: the percentage change over the last 12 months and the percentage change from the previous month. Measuring inflation over the last 12 months provides a longer and potentially less volatile perspective on inflation, while the percentage change from the previous month is more useful for assessing whether recent price pressures are waning or intensifying.[44]

Finally, we included two measures of expected future inflation, as inflation expectations can influence current economic behavior and indicate whether recent inflation experiences are changing views about future inflation (see table).

Indicators of Inflation, Feb.–Aug. 2021, and Average Inflation Rates, 2000–2019

Note: Underlined, red text indicates a higher rate of inflation than the previous month while black text indicates a lower rate of inflation than the previous month but with prices still rising overall. Deflation, or falling prices, would be indicated with a negative sign.
aPCE is based on the PCE price index, which reflects changes in the prices of goods and services purchased by or on behalf of consumers in the U.S. The Federal Open Market Committee states its longer-run inflation goal in terms of PCE inflation and typically aims for inflation of 2 percent on average over time, including by aiming to achieve inflation rates above 2 percent for some time after periods in which inflation is persistently below 2 percent.
bCPI is based on data from the Consumer Price Index for all urban consumers (CPI-U).
cMedian CPI is based on the 1-month inflation rate of the component whose expenditure weight is in the 50th percentile of price changes. By omitting outliers (small and large price changes) and focusing on the interior of the distribution of price changes, the median CPI may provide a better signal of the underlying inflation trend than the all-items CPI.
dThe 16 percent trimmed-mean CPI is based on a weighted average of 1-month inflation rates of components whose expenditure weights fall below the 92nd percentile and above the 8th percentile of price changes. By omitting outliers (small and large price changes) and focusing on the interior of the distribution of price changes, the 16 percent trimmed-mean CPI may provide a better signal of the underlying inflation trend than the all-items CPI.
eThe 10-year expected inflation rate comes from a model that decomposes the TIPS to nominal Treasury spread into three components: inflation expectations, the inflation risk premium, and a third component that may capture the TIPS liquidity premium or other factors that influence the relative demand for TIPS. See S. D'Amico, D. H. Kim, and M. Wei, "Tips from TIPS: The Informational Content of Treasury Inflation-Protected Security Prices," Journal of Financial and Quantitative Analysis, vol. 53, no. 1 (2018): pp. 395–436.
fProfessional forecast of inflation is an average forecast of expected CPI inflation in 2022–2023 (annualized) from forecasts collected by Bloomberg. Absent data for January 2021, we have used black text for February 2021 data based on the data for 10-year expected CPI inflation from TIPS.

Based on data available in early October 2021 covering price trends from February through August 2021, inflation has generally increased over the past several months. Indicators of inflation increased substantially relative to a year ago. While inflation remains higher than averages in recent decades, indicators of more recent price pressures (measured relative to the previous month) have recently been moderating somewhat (see figure). The median and trimmed mean CPI measures, as well as professional forecasts and investor expectations of future inflation, are generally below the broader inflation measures, although there has been some meaningful increase in expectations covering the next two years. As we note above, the FOMC aims to achieve rates of inflation that are above 2 percent for some time after periods in which inflation has been persistently below 2 percent, as it was leading up to and during the early months of the pandemic.

Percentage Change in Inflation Indicators over the Previous Month, Jan. 2019-Aug. 2021

The effects of inflation on different populations. Different populations can experience higher or lower levels of inflation than the national average (e.g., the Consumer Price Index for All Urban Consumers, known as CPI-U, which is the broadest and most comprehensive CPI). A number of studies examining distributional consequences of inflation have found that low-income households and the elderly in particular have historically experienced higher levels of inflation than other groups.[45] Regarding low-income households, these studies found that inflation experienced in recent years by the lowest income quartile was notably higher than inflation experienced by the highest income quartile.[46] This trend has also been evident during recessions. For example, one study found that during the first several months of the COVID-19 pandemic, although inflation was low as demand for many goods and services fell, those in the lowest income quintile experienced higher inflation than others.[47] One potential explanation for these differences is that low-income populations spend a higher share of their income on specific goods and services with prices that have increased at a faster rate. For example, during COVID-19 the price of food purchased for consumption at home increased faster than other purchases, and those with the lowest incomes typically spent a higher share of their income in this category.

The elderly have also tended to experience higher rates of inflation than the national average. The Bureau of Labor Statistics produces an experimental inflation index based on a set of goods and services that reflects the spending patterns of elderly consumers (individuals 62 years or older), the CPI-E. Since 2011, annual growth in the CPI-E has been roughly 0.1 percentage point higher than the CPI-U. The rate of increase in the CPI-E has generally been higher than the CPI-U, primarily because the elderly generally spend a higher share of their income on health care and shelter, and, historically, health care and shelter prices have risen at a faster rate than most other goods and services.

How households experience a given level of inflation depends in large part on their sources of income and their assets.
  • Labor income. As inflation rises, some workers are able to bargain for higher wages, and as a result, the effects of inflation on their purchasing power could be—at least partially—offset by higher wages. However, wages may fail to keep up with inflation, and if they do, it may take years for wages to adjust.[48]
  • Asset holdings. During periods of high inflation, the value of currency depreciates more rapidly, while other sources of wealth, such as investments in the stock market or real estate, will typically increase in value to reflect higher rates of inflation, and therefore would mitigate or hedge against the impact of inflation on household savings. Households with a higher share of their savings in currency or in low-interest savings vehicles would have fewer opportunities to hedge against inflation. Because low-income households typically have a larger share of their financial assets in cash or transaction accounts, higher levels of inflation would be more likely to negatively affect these households. At higher levels of inflation, individuals may reduce holdings of convenient, liquid assets to better hedge against inflation.
  • Government benefits and indexation. The impact of government transfers and large social programs on the distributional effects of inflation varies depending on the extent to which programs are adjusted (or indexed) for inflation. Public benefits typically make up a larger share of household income for low-income households and retirees who rely predominantly on Social Security retirement benefits or other government pensions. Therefore, if public benefits are indexed to inflation, low-income households and some retirees will be shielded from some of the effects of inflation. In the U.S., most large government transfer programs are adjusted for inflation and, as such, families who receive a considerable share of their income from public benefits are likely to be shielded somewhat from the effects of inflation. However, adjustments to public benefits are typically made annually, so during times of high inflation, low-income households and other program beneficiaries would continue to feel some effects of inflation in between periodic adjustments.

Methodology

To identify indicators for monitoring areas of the economy supported by the federal response to the COVID-19 pandemic, in particular by the six COVID-19 relief laws, we reviewed a number of sources. Specifically, we used prior GAO work, data from federal statistical agencies, information from the Board of Governors of the Federal Reserve System (Federal Reserve) and relevant federal agencies responsible for the pandemic response and oversight of the health care system, data available on the Bloomberg Terminal, and input from internal GAO experts. We reviewed the most recent data from these sources as of August and September 2021, depending on availability.

To identify indicators for monitoring inflation, we reviewed data from federal statistical agencies, academic and other research literature, information from the Federal Reserve, the Federal Open Market Committee, written responses to our questions provided by the Bureau of Labor Statistics and the Federal Reserve, data available on the Bloomberg Terminal, and input from internal GAO experts. We also reviewed selected academic research and government reports to better understand the distributional effects of inflation and how higher levels of inflation could affect certain households in different ways.

We assessed the reliability of the economic indicators we used through a number of steps, including reviewing relevant documentation, reviewing prior GAO work, and interviewing data providers. Collectively, we determined the indicators were sufficiently reliable to provide a general sense of (1) how the areas of the economy supported by the federal pandemic response were performing and (2) trends in the inflation experience of consumers.

Agency Comments

We provided the Department of Housing and Urban Development (HUD), the Department of Labor (DOL), the Department of the Treasury (Treasury), the Federal Reserve, and the Office of Management and Budget (OMB) with a draft of this enclosure. Treasury and the Federal Reserve provided technical comments, which we incorporated as appropriate. HUD, DOL, and OMB did not provide comments on this enclosure.

GAO’s Ongoing Work

We plan to monitor and report on changes in economic indicators, including developments in inflation, in future quarterly reports.

Related GAO Product

The Nation’s Fiscal Health: After Pandemic Recovery, Focus Needed on Achieving Long-Term Fiscal Sustainability. GAO-21-275SP. Washington, D.C.: March 23, 2021.

Contact information: Lawrance L. Evans, Jr., (202) 512-8678, evansl@gao.gov

COVID-19 Testing

Antigen testing, also known as “rapid testing,” is on the rise. Limited reporting of test results has thus far prevented the Department of Health and Human Services from using antigen testing data to monitor COVID-19. The Department is taking further steps aimed at improving reporting and exploring additional approaches for effective COVID-19 surveillance.

Entities involved: The Department of Health and Human Services, including the Assistant Secretary for Preparedness and Response, the Centers for Disease Control and Prevention, the Food and Drug Administration, and COVID-19 testing-related working groups (Testing and Diagnostics Working Group and Data Strategy and Execution Workgroup) under the Department.

Background

Following a downward trajectory in reported COVID-19 cases nationally from about mid-April to mid-June, the Delta variant is driving a resurgence in cases in the U.S. This resurgence highlights the continued importance of diagnostic and screening testing, including antigen testing, in the COVID-19 response.[49]

COVID-19 testing types. Antigen tests are one of two types of COVID-19 diagnostic and screening tests for which the Food and Drug Administration (FDA) has issued emergency use authorizations:[50]
  • Molecular tests are considered the “gold standard” for detecting an active SARS-CoV-2 infection, the coronavirus that causes COVID-19, but may require specialized laboratory equipment and often have a 1-3 day test turnaround time, mainly due to the time needed to send a sample to the laboratory, according to FDA officials.
  • Antigen tests (sometimes known as “rapid tests”) have a faster turnaround time than molecular tests in most cases—about 30 minutes or less. Most antigen tests may be conducted at point-of-care or at-home settings.[51] Some point-of-care settings are health-care related—such as doctors’ offices, pharmacies, and nursing homes, while others are not related to health care, such as workplaces. There are two types of tests that are authorized for use at home: those requiring a prescription and those not requiring a prescription, also known as over-the-counter tests.

    According to FDA, antigen tests generally perform better in detecting active infections when there are high concentrations of virus found in upper respiratory specimens. Further, the probability of detecting an active infection is enhanced when testing is repeated more than once over a few days (referred to as “serial testing”). However, antigen tests generally have a lower sensitivity—or ability to correctly identify people with COVID-19—than molecular tests. As a result, the Centers for Disease Control and Prevention (CDC) recommends confirming some negative antigen tests for people with symptoms with molecular tests.

In general, antigen testing for COVID-19 provides two public health benefits:
  1. It helps reduce disease spread because antigen tests typically have a faster turnaround time and therefore individuals can more quickly identify whether they are infected and then self-isolate and take other precautions, accordingly; and
  2. It can help inform public health disease surveillance and response efforts to the extent that test results are reported to public health authorities.[52]

The Department of Health and Human Services (HHS) has emphasized the importance of data from reported tests, including antigen tests, for public health disease surveillance purposes. The department noted that access to clear and accurate testing data is essential to the public and community leaders as they use data to make response and reopening decisions.[53]

HHS entities and stakeholders involved in testing and data reporting. Test result data are reported to HHS through jurisdictional health authorities. In general, laboratories and point-of-care settings (such as doctors’ offices) report test results to local, state, territorial, and tribal public health authorities. These jurisdictional health authorities then report the data to CDC and HHS.

FDA plays a role in testing by issuing emergency use authorizations or approvals of test products. In addition, housed within HHS are two testing-related working groups (referred to as HHS working groups in this enclosure). The first is the Testing and Diagnostics Working Group, whose purpose is to accelerate and support U.S. testing capacity. This working group is under the Office of the Assistant Secretary for Preparedness and Response (ASPR), while members come from CDC, FDA and other HHS and non-HHS agencies and departments.[54] The second is the Data Strategy and Execution Workgroup, which is a multidisciplinary U.S. Government interagency team that was created in June 2020 under direction of the White House COVID-19 Task Force. ASPR and CDC serve as co-leads of the Data Strategy and Execution Workgroup.[55]

Overview of Key Issues

Antigen testing is on the rise. Over the course of the pandemic, the number of authorized antigen tests has increased. FDA authorized the first antigen tests for use at point-of-care settings in May 2020 and the first antigen tests for at-home testing in December 2020. As of October 14, 2021, FDA has issued 36 emergency use authorizations for antigen tests, including tests authorized for use in laboratory, point-of-care, and at-home settings (see table below). [56]
Number of FDA Emergency Use Authorizations for COVID-19 Antigen Tests by Setting, as of October 14, 2021

Authorized settings

Number of tests

Laboratory only

6

Laboratory and point of care

19

Laboratory, point of care, and at home with a prescription

3

Laboratory, point of care, and at home without a prescription (over-the-counter)

8

Total

36
Source: GAO analysis of Food and Drug Administration (FDA) information. I GAO-22-105051

HHS working group officials told us that antigen testing has comprised a larger share of testing over time, which will likely continue to increase. Our analysis of CDC’s monthly counts of reported testing data also suggests that antigen testing has increased as a whole and as a percent of total tests reported (antigen and molecular). According to the CDC data, the number of reported antigen tests per month increased from about 50,000 in June 2020 to nearly 12 million in August 2021, and as a percentage of total tests, reported antigen tests increased from less than 1 percent in June 2020 to more than 20 percent of all tests reported in July and August 2021.[57]

In addition, on September 9, 2021, the Administration announced the “Path out of the Pandemic” plan, which is expected to further increase the availability of antigen tests for COVID-19.[58] According to the plan, the Administration will exercise authorities in the Defense Production Act to support sustained manufacturing capacity and will spend nearly $2 billion to procure 280 million antigen tests, including rapid point-of-care and over-the-counter COVID-19 tests. As part of the plan, the Administration announced that certain major retailers will sell over-the-counter tests at cost, resulting in discounts of up to 35 percent. The administration also plans to make antigen tests free for Medicaid beneficiaries and provide 25 million tests to 1,400 community health centers and hundreds of food banks.

HHS entities have taken actions in an effort to improve reporting of antigen test results. In June 2020, HHS issued guidance prescribing reporting requirements for laboratories and point-of-care settings conducting COVID-19 testing, which includes antigen tests.[59] However, federal reporting requirements do not pertain to individuals using at-home over-the-counter antigen tests. See figure below for information on reporting requirements by setting.

Public Health Reporting Requirements or Guidance by Antigen Test Authorized Settings

Note: All antigen tests are authorized for laboratory settings, and some are also authorized for point-of-care and at-home settings.

Since HHS published guidance in June 2020, the department and CDC have tried to improve the reporting of testing data—including antigen testing data—to local, state, and federal health officials, including by taking the following actions:

The department has updated its guidance to clarify test reporting requirements, including those for antigen testing, for laboratories and point-of-care settings. In January 2021, HHS updated its guidance on reporting requirements in an effort to further facilitate complete and comprehensive laboratory testing data reporting.[60] For example, the January 2021 guidance clarified the various methods for submitting test results. This guidance applies to antigen testing conducted in laboratory and point-of-care settings—including non-health-care settings such as workplaces and schools.

CDC issued guidance to encourage reporting of antigen test results from individuals and non-health-care settings. Although federal reporting requirements do not pertain to individuals using at-home over-the-counter antigen tests, CDC issued guidance for over-the-counter antigen testing in April 2021, intended in part, to encourage reporting. The guidance noted that users should report test results to their health care providers or to local or state health departments if they do not have a health care provider.[61]

CDC also issued guidance to employers about the importance of reporting antigen test results. It noted that employers operating a testing program as a point-of-care setting are required to report results to public health officials in accordance with the CARES Act. It also encouraged employers who collect test results from employees who self-test using over-the-counter tests to report these test results as well—stating that “sharing results with local public health authorities supports contact tracing efforts to slow the spread of COVID-19.”[62]

FDA and HHS working groups collaborated with test manufacturers to encourage and facilitate user reporting of results. FDA does not have the authority to require individuals to report over-the-counter test results. However, FDA officials told us they worked with manufacturers during the emergency use authorization application process, as well as during town halls they hosted with manufacturers, to identify approaches that encourage and facilitate such reporting by individuals. For example, one approach is a smart phone application that communicates tests results to the user and automatically transmits results to public health officials. In addition, HHS working group officials told us they have held collaborative discussions with test manufacturers to identify ways to ensure high-quality diagnostic data are captured from antigen tests used both in at-home and in point-of-care settings, such as schools.

Limited antigen test reporting prevents HHS and CDC from using these data for COVID-19 surveillance. HHS working group and CDC officials told us that limited antigen test reporting to jurisdictional health departments and from jurisdictions to CDC, prevents them from using these data for COVID-19 surveillance. Instead, these officials told us that they use antigen test data to track trends in tests distributed, test supply availability, and limited programmatic metrics.

HHS working group and CDC officials noted that the number of reported antigen test results is much lower than the expected number of administered tests. CDC officials also told us they do not presently have an approach to capture the number of antigen tests administered. This total number is needed to calculate the proportion of antigen tests in a given population that are positive for infection (also known as, the test positivity rate)—a key public health indicator for surveillance of COVID-19, as we reported in January 2021. As a result, test positivity rates have generally included only molecular tests.[63] As antigen test availability increases, especially over-the-counter tests, test positivity rates based only on molecular tests, or based on limited antigen test data, could be less useful as indicators of trends in COVID-19 spread.

At the state and local levels, representatives from four national stakeholder organizations told us that the limited reporting of antigen test data can hinder the use of these data for surveillance.[64] For example, representatives from one organization told us that some local health department officials are limited in their ability to use antigen testing data to understand the spread of COVID-19 in their communities, including helping to identify local outbreaks, perform contact tracing, and identify individuals where sequencing may need to be performed to monitor the spread of variants.[65]

HHS and CDC are taking steps aimed at improving reporting and exploring additional approaches for effective COVID-19 surveillance. HHS working group and CDC officials told us they are considering approaches to further improve antigen test data reporting, as they believe these data could be valuable for surveillance if reporting were more complete. For example, these approaches include continuing to work with test manufacturers and making enhancements to data reporting by building reporting methods into the testing process, such as for testing processes used in schools and workplaces. More complete data and reporting from such approaches could provide an earlier indication and fuller picture of where community transmission is occurring, especially among individuals who are asymptomatic or experiencing less severe symptoms, according to officials.

Representatives from one stakeholder group told us that targeted antigen testing in specific areas can have a role in surveillance. Additionally, representatives from another stakeholder group told us that not every antigen test result is expected or needs to be reported in order to use the data for surveillance purposes. Stakeholder groups also commented on the reporting challenge specific to over-the-counter test results, stating that there is likely no realistic way to mandate that individuals report the results from these types of tests.

HHS working group and CDC officials stated that while they are trying to improve reporting of antigen testing data, they are also considering surveillance approaches to supplement or enhance current surveillance efforts. For example, CDC is exploring wastewater surveillance approaches. According to CDC officials, wastewater surveillance provides data that can complement and confirm other forms of clinical case-based surveillance for COVID-19, and it can provide an efficient pooled community sample that is particularly useful in areas where timely COVID-19 clinical testing is underutilized or unavailable.

If antigen testing continues to expand as expected, especially with the increasing availability of over-the-counter tests, the ongoing limited reporting of antigen test results could reduce the ability of public health officials to more comprehensively monitor and effectively respond to COVID-19. These issues highlight the importance of HHS working group and CDC efforts aimed at improving reporting and exploring additional approaches for effective surveillance.

Methodology

To understand federal efforts to collect antigen test data and the role these data play in monitoring COVID-19, we reviewed relevant CDC, FDA, and HHS documentation, such as HHS and CDC guidance related to the reporting of antigen test results. We reviewed publicly available information from FDA’s website on its emergency use authorizations for COVID-19 antigen tests, including the conditions of the authorizations, as well as to determine the number of tests authorized and the authorized settings for these tests. In addition, we collected written responses to questions we submitted to CDC, FDA, and HHS working groups.

To gather perspectives from public health stakeholder groups involved in testing and surveillance, we interviewed representatives from four national organizations that collectively represent local, state, and territorial public health agencies and laboratories, and state epidemiologists: the Association of State and Territorial Health Officials, the Council of State and Territorial Epidemiologists, the National Association of County and City Health Officials, and the Association of Public Health Laboratories.

To describe public reporting of antigen test data, we assessed general trends in the numbers of monthly reported antigen tests relative to molecular tests as reported to HHS. We assessed the reliability of the monthly testing data by reviewing HHS and CDC information about the data and limitations. We determined that the data were sufficiently reliable for the purpose of assessing high level, general trends in antigen test data.

Agency Comments

We provided a draft of this enclosure to HHS and the Office of Management and Budget for review and comment. HHS provided technical comments, which we incorporated as appropriate. The Office of Management and Budget did not provide comments on this enclosure.

GAO’s Ongoing Work

We are continuing to review federal efforts related to COVID-19 testing and surveillance. Our ongoing work will further explore the evolving testing landscape and related data collection, as well as surveillance approaches CDC is using, or plans to use, to monitor COVID-19 in the continued response and into recovery.

GAO’s Prior Recommendations

The table below presents our recommendations on testing from prior bimonthly and quarterly CARES Act reports.
Prior GAO Recommendations Related to COVID-19 Testing

Recommendation

Status

The Director of the Centers for Disease Control and Prevention should work with appropriate stakeholders—including public health and private laboratories—to develop a plan to enhance laboratory surge testing capacity. This plan should include timelines, define agency and stakeholder roles and responsibilities, and address any identified gaps from preparedness exercises (July 2021 report).

Open—not addressed. As of September 2021, we are awaiting updates from the agency.

The Director of the Centers for Disease Control and Prevention should assess the agency's needs for goods and services for the manufacturing and deployment of diagnostic test kits in public health emergencies. This assessment should evaluate how establishing contracts in advance of an emergency could help the Centers for Disease Control and Prevention quickly and cost-effectively acquire these capabilities when responding to future public health emergencies, including those caused by novel pathogens, and should incorporate lessons learned from the COVID-19 emergency (July 2021 report).

Open—not addressed. As of September 2021, we are awaiting updates from the agency.

The Secretary of Health and Human Services (HHS) should develop and make publicly available a comprehensive national COVID-19 testing strategy that incorporates all six characteristics of an effective national strategy. Such a strategy could build upon existing strategy documents that HHS has produced for the public and Congress to allow for a more coordinated pandemic testing approach (January 2021 report).

Open—not addressed. HHS partially agreed with our recommendation. In January 2021, HHS agreed that the department should take steps to more directly incorporate some of the elements of an effective national strategy, but expressed concern that producing such a strategy at this time could be overly burdensome on the federal, state, and local entities that are responding to the pandemic, and that a plan would be outdated by the time it was finalized or potentially rendered obsolete by the rate of technological advancement. In May 2021, HHS told us that the White House and HHS plan to execute a National Testing Strategy that will act upon the administration's testing goals. According to HHS, a finalized document is forthcoming that includes specific actions as well as timelines to achieve these goals. HHS said the National Testing Strategy will speak to the country's short-term COVID-19 needs as well as the long-term needs associated with the country's broader biopreparedness. We will continue to monitor the implementation of this recommendation. As of September 2021, we are awaiting updates from the agency.

To improve the federal government’s response to COVID-19 and preparedness for future pandemics, the Secretary of Health and Human Services should immediately establish an expert committee or use an existing one to systematically review and inform the alignment of ongoing data collection and reporting standards for key health indicators. This committee should include a broad representation of knowledgeable health care professionals from the public and private sectors, academia, and nonprofits (January 2021 report).

Open—not addressed. HHS partially agreed with our recommendation. As of July 2021, HHS stated that it plans to consider ways to establish more permanent work groups to incorporate best practices for ongoing interagency data needs and to scale up as necessary during future public health emergencies. HHS also stated that the Data Strategy and Execution Workgroup, established as part of the HHS COVID-19 response, has helped address the need for a federal interagency coordination process to align ongoing COVID-19 data collection and reporting efforts. We maintain that immediately establishing an expert committee—not limited to federal agency officials—that includes knowledgeable health care professionals from the public and private sectors, academia, and nonprofits is an important and worthwhile effort to help improve the federal government's response to COVID-19 and its preparedness for future pandemics. As of September 2021, we are awaiting updates from the agency.

The Secretary of Health and Human Services should ensure that the Director of the Centers for Disease Control and Prevention (CDC) clearly discloses the scientific rationale for any change to testing guidelines at the time the change is made (November 2020 report).

Open—partially addressed. HHS agreed with our recommendation and has begun to implement it. For example, on February 16, 2021, CDC issued Interim Guidance on Testing Healthcare Personnel that stated asymptomatic health care personnel who have recovered from COVID-19 may not need to undergo repeat testing or quarantine in the case of another exposure within 3 months of their initial diagnosis. To support this guidance, CDC's website provided links to studies that explained the scientific rationale. Additionally, CDC told us that it continues to consult with scientific stakeholders when issuing or updating guidance documents, and outlined a series of steps the agency plans to take to strengthen its testing guidance. However, as of September 2021, CDC had not fully addressed the recommendation. We will monitor the implementation of this recommendation to ensure that these efforts continue.
Source: GAO. I GAO-22-105051

Contact information: SaraAnn Moessbauer, 202-512-4943, MoessbauerS@gao.gov, and Mary Denigan-Macauley, 202-512-8552, DeniganMacauleyM@gao.gov

FDA Oversight of COVID-19 Vaccine Manufacturing Quality

The Food and Drug Administration took a variety of steps to help ensure the manufacturing quality of the COVID-19 vaccines authorized for emergency use.

Entity involved: Food and Drug Administration, within the Department of Health and Human Services

Background

The Food and Drug Administration’s (FDA) oversight of manufacturing establishments is a critical tool in how the agency helps ensure the manufacturing quality of vaccines, including those used to prevent COVID-19.

FDA generally licenses vaccines for marketing in the U.S. through approval of a biologics license application (BLA). BLAs contain data intended to support the application, including data from non-clinical studies and clinical studies on the safety and effectiveness of the product, as well as manufacturing data and information. According to FDA, as part of each BLA review, it assesses manufacturing processes, establishments involved in manufacturing, and the quality and consistency of the product.

FDA also inspects the establishments involved in manufacturing vaccines as part of the BLA review process or after the product is licensed for the U.S. market. These inspections are official examinations of establishments to determine compliance with the law and applicable regulations. Inspections may result in written observations provided to each manufacturer and an inspection classification, which is an assessment of the seriousness of the observations from the inspection. According to FDA, pre-license and pre-approval inspections are needed in about 20 percent of instances, usually in cases in which an establishment has a history of compliance issues or when FDA has not previously inspected the establishment.[66]

Under certain circumstances, such as the COVID-19 pandemic, FDA may temporarily allow the use of an unlicensed product through an emergency use authorization (EUA), provided certain statutory criteria are met.[67] For example, FDA may issue an EUA if it is reasonable to believe that the product may be effective and the known and potential benefits of the product outweigh the known and potential risks. FDA guidance indicates that companies requesting EUAs should provide information about manufacturing processes and controls for establishments involved in manufacturing. FDA may conduct inspections of manufacturing establishments prior to issuing an EUA, but the statutory criteria for EUAs do not require FDA to conduct such inspections prior to issuance. FDA guidance for COVID-19 vaccines states that any vaccine company that initially receives an EUA is expected to conduct further research and work towards submission of a BLA as soon as possible.

Overview of Key Issues

To help ensure manufacturing quality for the COVID-19 vaccines authorized for emergency use, FDA reviewed documentation and conducted on-site reviews. As of August 2021, FDA had authorized three COVID-19 vaccines (Pfizer, Moderna, and Janssen) for emergency use, and one of these vaccines (Pfizer) had also been licensed.[68] To assess each of the 18 establishments that manufactured these COVID-19 vaccines, FDA took a variety of steps, including reviewing documentation provided by the vaccine companies for their EUA requests and reviewing prior inspections reports.[69]

Documentation from EUA requests. According to FDA, the agency reviewed documentation and data that each of the COVID-19 vaccine companies included in their EUA requests about the establishments used in manufacturing the vaccines. Examples of key manufacturing information that FDA reviewed included:
  • Quality systems and controls, the adequacy of the building design and equipment, and the container storage and closure conditions to ensure the sterility of the product in the final container.
  • Cross-contamination controls to ensure they are suitable to mitigate risk of cross contamination.
  • The adequacy of multiple product manufacturing areas used to manufacture the vaccine, including cleaning and changeover procedures.
  • The qualification of critical equipment for manufacturing the drug substance and drug product.[70]

Documentation of prior FDA inspections. For the purpose of the EUA review process, FDA was not required to and did not conduct inspections specifically examining COVID-19 vaccine manufacturing for any of the establishments prior to authorizing the three vaccines for emergency use.[71] However, FDA did review the establishments’ inspection histories.

Our review found that 14 of the 18 establishments that manufacture COVID-19 vaccines had been previously inspected at least once by FDA from October 2011 through the date the initial EUA request for the COVID-19 vaccine was submitted to the agency.[72] This amounted to 90 total inspections. For all but one of these 14 establishments, FDA’s most recent inspection was within the last 4 years. (See figure.)

Establishments Manufacturing the COVID-19 Vaccines, by the Date of the Most Recent Historical FDA Inspection Prior to Initial Emergency Use Authorization (EUA) Request and Manufacturing Type

Notes: Each icon or group of icons is an establishment identified by the vaccine companies as manufacturing the COVID-19 vaccines for the U.S. market as of June 30, 2021. We excluded establishments that were not being used in the manufacturing process as of June 2021, as well as those used for packaging, storage, and laboratory work.
Data are for biologic establishment inspections and drug establishment inspections conducted from October 2011 through the date on which each vaccine company initially requested an EUA. FDA subsequently amended the EUAs for the Pfizer and Moderna vaccines to expand their use, such as for different age groups or patients with certain conditions.
Drug substance refers to the bulk amounts of the unformulated active substance and fill-finish refers to the transfer of the vaccine into sterile containers. Lipid nanoparticles are added to the drug substance to stabilize the mRNA.
aThis establishment manufactures both the Moderna and Janssen vaccines.

FDA classifies inspections based on the seriousness of the deficiencies identified during the inspections. FDA classified the 90 prior inspections of these establishments, which were conducted prior to the initial EUA requests, as follows:
  • In 22 of 90 inspections, FDA found no objectionable conditions or practices or the conditions found did not justify further regulatory action (known as no action indicated).
  • In 64 of 90 inspections, FDA found objectionable conditions or practices that were not deemed serious deficiencies and did not recommend any administrative or regulatory actions (known as voluntary action indicated).
  • In two of the 90 inspections, FDA found serious deficiencies requiring regulatory and/or administrative actions (known as official action indicated).[73]
    • One of the establishments was inspected in 2013. FDA reinspected this establishment later in 2013 and did not find serious deficiencies during that inspection or during subsequent inspections in 2014, 2015, and 2018.
    • The second establishment was inspected in 2020. FDA later reinspected this establishment in 2021 and identified serious deficiencies.[74] In response, the establishment submitted a corrective action plan and worked with FDA to correct the deficiencies.

Other information sources. As needed, in addition to reviewing EUA requests and past inspection documentation, FDA also used a variety of other information sources including on-site reviews, record requests, reports from foreign regulators, and inspections to further collect information about and assess the establishments manufacturing the COVID-19 vaccines. FDA utilized some of these sources prior to issuing the initial EUAs, as well as after.
  • On-site reviews. FDA conducted on-site reviews—investigations or site visits—for some of the establishments manufacturing the COVID-19 vaccines. During the COVID-19 pandemic, FDA conducted EUA investigations to assess the current operational status of establishments manufacturing the COVID-19 vaccines and provide feedback on manufacturing earlier in the process. Site visits are a longstanding tool used by FDA to learn and observe establishment operations to improve understanding and open a dialogue between industry and the agency. Investigations and site visits, unlike inspections, do not lead to written observations or inspection classifications.[75]

    As of August 2021, FDA conducted five investigations and three site visits to assess manufacturing quality for the COVID-19 vaccines at three establishments. For example, FDA conducted a site visit prior to issuing an EUA at one establishment that had not been inspected by FDA within the past 9 years.
  • Record requests. FDA may request that establishments send records and other information in advance of or in lieu of certain types of inspections.[76] Such records include those that FDA commonly reviews during an on-site inspection, such as reports on product quality, lists of all products manufactured at a facility, and summaries of any discrepancies identified during manufacturing and testing and any corresponding investigations. FDA uses record requests to inform inspection planning or decisions to adjust the intervals in between inspections, or as substitutes for certain pre-license or pre-approval inspections as determined by the agency.[77] For the authorized COVID-19 vaccines, FDA requested records for three establishments prior to conducting inspections, as of August 2021.
  • Foreign regulator reports. FDA also received reports from foreign regulators about COVID-19 vaccine manufacturing for all seven of the establishments that were located in foreign countries as of August 2021. Two of these establishments had not been inspected by FDA in almost 10 years, while another had not been inspected since 2013.
  • Inspections. While FDA did not conduct any new inspections of these establishments prior to issuing the initial EUAs, FDA conducted several inspections after. Specifically, FDA subsequently inspected six establishments manufacturing the COVID-19 vaccines from April through July 2021. Three of the six inspections were for establishments manufacturing Pfizer’s COVID-19 vaccine, including one in Europe, and occurred after the company began submitting its BLA for review.

    One of these six inspections was for a Janssen contractor establishment (Emergent) in April 2021. This establishment had previously been inspected in April 2020 and FDA indicated that it found serious deficiencies. The April 2021 inspection occurred following a report of contamination with the drug substance for another COVID-19 vaccine not currently authorized in the U.S. (AstraZeneca).[78] This inspection identified multiple serious deficiencies related to manufacturing quality control systems, building design, equipment, and personnel training. Following the April 2021 inspection, manufacturing of new batches of the drug substance for the Janssen vaccine at the establishment and distribution of existing batches were halted. Manufacturing of the AstraZeneca vaccine was also removed. Emergent subsequently submitted a corrective action plan and worked with FDA to correct the deficiencies. In July 2021, FDA informed Emergent that it did not object to resuming manufacturing of the Janssen COVID-19 vaccine at the Emergent establishment, according to FDA officials.

FDA examined the manufacturing quality of the three other COVID-19 vaccines that have not been authorized or licensed. As of August 2021, three other vaccine companies (AstraZeneca, Novavax, and Sanofi/GSK) that also participated in the HHS-DOD COVID-19 Countermeasures Acceleration Group (previously known as Operation Warp Speed) had not requested EUAs or submitted BLAs.[79] FDA officials told us that they have been examining manufacturing quality for the establishments manufacturing these vaccines as part of the clinical trial process.

FDA used information from past FDA inspections and supplemented with information from on-site reviews and inspections as needed for the 13 establishments manufacturing these vaccines.[80]

Inspection history. In examining the establishments’ FDA inspection histories, we found that from October 2011 through May 2021, FDA had previously inspected 11 of the 13 establishments manufacturing these COVID-19 vaccines.[81] This resulted in a total of 73 inspections. All of the inspected establishments were inspected in the last 3 years. (See figure.)

Establishments Manufacturing the COVID-19 Vaccines Not Authorized or Licensed, by Date of Their Most Recent FDA Inspections and Manufacturing Type, as of May 2021

Notes: Each icon or group of icons is an establishment identified by the vaccine companies as manufacturing the COVID-19 vaccines for the U.S. market as of June 30, 2021. We excluded establishments that were not currently being used in the manufacturing process as of June 2021, as well as those used for packaging, storage, and laboratory work. Data are for biologic establishment inspections conducted from October 2011 through May 26, 2021, and for drug establishment inspections conducted October 2011 through April 29, 2021.
As of August 2021, AstraZeneca, Novavax, and Sanofi/GSK had not requested emergency use authorizations or submitted biologics license applications for their COVID-19 vaccines. FDA officials told us that they have been examining manufacturing quality for the establishments manufacturing these vaccines as part of the clinical trial process.
Drug substance refers to the bulk amounts of the unformulated active substance and fill-finish refers to the transfer of the vaccine into sterile containers. An adjuvant is an ingredient used in some vaccines that helps create a stronger immune response in people receiving the vaccine.
aThis establishment manufactures both the Novavax and Sanofi/GSK vaccines.

FDA classified these 73 inspections as follows
  • In 16 of 73 inspections, FDA classified the inspection as no action indicated.
  • In 49 of the 73 inspections, FDA classified the inspection as voluntary action indicated.
  • In 3 of the 73 inspections, FDA classified the inspections as official action indicated.[82]
    • One of these inspections was conducted in 2013. FDA later reinspected this establishment twice in 2014, and again in 2015, 2016, 2017, 2018, 2019, and 2021 and did not identify serious deficiencies.
    • The second was conducted in 2019. FDA later reinspected this establishment in 2020 and did not identify any serious deficiencies.
    • The third inspection was conducted in 2020. FDA later reinspected this establishment in 2021 and identified serious deficiencies.[83] In response, manufacturing of the COVID-19 vaccine at this establishment was removed.

Onsite reviews. As of August 2021, FDA had conducted seven EUA investigations and two site visits at six establishments manufacturing these vaccines. For example, FDA conducted an EUA investigation related to a COVID-19 vaccine in March 2021 for an establishment that had not been inspected by FDA in almost 10 years. This establishment is a contract manufacturer for Texas A&M University, which serves as one of three of the HHS Biomedical Advanced Research and Development Authority’s Centers for Innovation in Advanced Development and Manufacturing intended to develop and manufacture medical countermeasures for the federal government.

Inspections. FDA also reported that it conducted inspections specifically for the COVID-19 vaccines at two establishments in April and July 2021.

Methodology

To conduct this work, we obtained information from the six COVID-19 vaccine companies participating in the HHS-DOD COVID-19 Countermeasures Acceleration Group on the establishments involved in manufacturing their vaccines for the U.S. market as of June 2021. We used this information in our examination of FDA’s inspections from the agency’s Field Accomplishments and Compliance Tracking System. Specifically, we reviewed FDA data on vaccine and other biologic inspections from October 1, 2011 through May 26, 2021 and data on drug inspections from October 1, 2011 through April 29, 2021. We examined data from October 1, 2011, to provide a wide enough range to capture inspection activities over time. We also reviewed agency guidance and documents, as well as interviews and written responses from FDA officials related to the agency’s vaccine oversight activities during the COVID-19 pandemic.

To assess the reliability of the data, we conducted electronic data testing for missing data and outliers, reviewed relevant documentation, and obtained information from knowledgeable agency officials. We found the data sufficiently reliable for our purposes.

Agency Comments

We provided the Department of Health and Human Services (HHS) and the Office of Management and Budget (OMB) with a draft of this enclosure. HHS provided technical comments, which we incorporated as appropriate. OMB did not provide comments on this enclosure.

GAO’s Ongoing Work

We will continue to report on the federal efforts surrounding the development, manufacturing, and distribution of the COVID-19 vaccines, including the use of the HHS-DOD COVID-19 Countermeasures Acceleration Group (formerly known as Operation Warp Speed).

Related GAO Products

Operation Warp Speed: Accelerated COVID-19 Vaccine Development Status and Efforts to Address Manufacturing Challenges. GAO-21-319. Washington, D.C.: February 11, 2021.

COVID-19: Federal Efforts Accelerate Vaccine and Therapeutic Development, but More Transparency Needed on Emergency Use Authorizations. GAO-21-207. Washington, D.C.: November 17, 2020.

Contact information: Mary Denigan-Macauley, 202-512-7114, deniganmacauleym@gao.gov

FDA Inspections of Biologic Manufacturing during the COVID-19 Pandemic

The Food and Drug Administration significantly reduced inspections of biologic manufacturing establishments due to the COVID-19 pandemic but identified alternative tools it could use to help oversee manufacturing quality during this emergency.

Entity involved: Food and Drug Administration, within the Department of Health and Human Services

Background

The Food and Drug Administration’s (FDA) inspections of manufacturing establishments are a critical tool in how the agency oversees the manufacturing quality of biologics used to prevent, treat, and cure diseases and medical conditions, such as cancers and infectious diseases.

Biologics are a diverse category of products that include vaccines and allergenics, blood and blood components, and cells, certain human tissues, and gene therapy products.[84] Biologics are generally derived from living material, such as the human body or a microorganism, and are generally more complex than other, chemically synthesized drugs. Biologics tend to be heat sensitive and susceptible to microbial contamination, making the manufacturing process for biologics typically more complex than it is for other drugs.

Unlike chemically synthesized drugs, biologics marketed in the U.S. are mostly manufactured domestically, according to FDA. However, there is variation by product type. For example, blood and blood components are overwhelmingly manufactured at establishments located in the U.S. while vaccine and allergenic manufacturing establishments are mostly located both in Europe and the U.S.

Most biologics are regulated by FDA’s Center for Biologics Evaluation and Research.[85] FDA generally licenses biologics, such as vaccines, for marketing in the U.S. through approval of a biologics license application (BLA). BLAs contain data intended to support the application, including data from non-clinical studies and clinical studies on the safety and effectiveness of the product, as well as manufacturing data and information. According to FDA, as part of each BLA review, it assesses manufacturing processes, establishments involved in manufacturing, and the quality and consistency of the biologic.

FDA inspects the establishments involved in manufacturing biologics as part of the BLA review process or after the product is licensed for the U.S. market. These inspections are official examinations of establishments to determine compliance with the law and applicable regulations. Inspections may result in written observations provided to each manufacturer and an inspection classification, which is an assessment of the seriousness of the observations from the inspection. FDA conducts several types of inspections:
  • Pre-license and pre-approval inspections. FDA may conduct pre-license and pre-approval inspections in response to new BLAs or manufacturing changes to existing BLAs.[86] According to FDA, pre-license and pre-approval inspections are needed in about 20 percent of instances, usually when an establishment has a history of compliance issues or if FDA has not previously inspected the establishment.
  • Surveillance inspections. FDA conducts surveillance inspections after a product is marketed to determine an establishment’s ongoing compliance with current good manufacturing practice (CGMP) regulations.[87] FDA uses a risk-based approach to select biologic establishments for surveillance inspections.[88] According to FDA, the agency typically aims to inspect the highest risk establishments every 2 years and inspect the remaining establishments every 2 to 4 years.
  • For-cause inspections. FDA conducts for-cause inspections after a product is marketed to investigate specific issues or follow up on a previous regulatory action, such as when serious deficiencies were identified during a prior inspection.

Overview of Key Issues

FDA inspections of biologic manufacturers had generally been declining since 2012 and mostly stopped during the COVID-19 pandemic. Prior to the COVID-19 pandemic, FDA inspections of biologic manufacturing establishments had declined slightly since 2012—from a high of 1,922 in fiscal year 2013 to 1,668 in fiscal year 2019 (see figure below). Surveillance inspections make up the majority of biologic inspections and particularly decreased in 2019. FDA officials attributed this decrease in inspections in fiscal year 2019 to a lapse in appropriations and to vacancies among the staff who conduct inspections.[89]

FDA Biologic Inspections by Year and Type of Inspection, Fiscal Years 2012–2021

Notes: FDA conducts pre-approval and pre-license inspections for new biologic license applications or manufacturing changes to existing licenses. FDA conducts surveillance inspections after a product is marketed to ensure ongoing compliance with current good manufacturing practice regulations. For-cause inspections are conducted after a product is marketed to investigate specific issues or follow up on a previous regulatory action, such as when serious deficiencies were identified during a prior inspection.
Fiscal year 2021 data are as of May 26, 2021.

Similar to what we reported in March 2021 for FDA’s drug inspections, due to the pandemic, beginning on March 17, 2020, FDA paused most biologic inspections and transitioned to focus solely on those deemed mission-critical, a designation which it determines on a case-by-case basis. During the COVID-19 pandemic, FDA gave higher priority to establishments that manufactured products related to the COVID-19 response or products used to treat serious diseases or medical conditions for which there is no substitute. Mission-critical inspections may include both domestic and foreign establishments.

In addition to mission-critical inspections, beginning in July 2020, FDA reported that it resumed certain other high priority domestic surveillance and for-cause inspections, such as following up on serious deficiencies identified in previous inspections, in areas where it is safe to do so. Citing concern for the safety of its employees, these prioritized domestic inspections have all been preannounced; whereas, prior to the pandemic, FDA generally did not announce domestic surveillance inspections.[90] As of August 2021, FDA officials said the agency had not set a date for when it planned to resume unannounced domestic inspections. FDA’s inspection priorities during the COVID-19 pandemic are generally the same for all medical products, including drugs, which we reported on in March 2021.

As a result of the pause and limited restart, inspections further declined significantly in fiscal years 2020 and 2021. In the year following the decision to pause inspections, from April 2020 through March 2021, FDA conducted 58 biologic inspections, compared to more than 1,500 inspections conducted during the same period in the year prior to the pause in inspections (see figure below). These 58 biologic inspections were all of domestic establishments.

Number of FDA Biologic Inspections by Month, Fiscal Years 2019–2021

Note: Fiscal year 2021 data are as of May 26, 2021.

Due to limited in-person inspections, FDA identified alternative tools it could use to help oversee the quality of biologic manufacturing establishments during the pandemic. These alternative tools include:[91]

Records requests. FDA may request that establishments send records in advance of or in lieu of certain types of inspections.[92] Such records include those that FDA commonly reviews during an on-site inspection, such as reports on product quality, lists of all drugs manufactured at a facility, and summaries of any discrepancies identified during manufacturing and testing and any corresponding investigations. FDA uses record requests to inform inspection planning or decisions to adjust the intervals in between inspections, or as substitutes for certain pre-approval inspections as determined by the agency.[93] FDA reported issuing record requests to 179 biologic establishments in fiscal year 2020 and 601 biologic establishments in fiscal year 2021 (as of May 2021). Prior to the pandemic, FDA did not use record requests as an alternative inspection tool for those biologics regulated by the Center for Biologics Evaluation and Research, according to FDA responses.

Investigations and site visits. During the COVID-19 pandemic, FDA conducted emergency use authorization (EUA) investigations to assess the current operational status of establishments manufacturing the COVID-19 vaccines and to provide feedback on manufacturing earlier in the process. Site visits are a longstanding tool used by FDA to learn and observe establishment operations for the purpose of improving understanding and opening a dialogue between industry and the agency. Unlike inspections, investigations and site visits do not lead to an inspection classification.[94] FDA utilized these tools for several of the establishments manufacturing the COVID-19 vaccines. For more information about the steps FDA used to help ensure manufacturing quality for the COVID-19 vaccines, see the FDA Oversight of COVID-19 Vaccine Manufacturing Quality enclosure.

Remote interactive evaluations. These evaluations include remote live-streaming video of operations, teleconferences, or screen sharing. In April 2021, FDA issued guidance noting that remote interactive evaluations, in which establishments have to agree to participate, do not constitute inspections. Instead, FDA would use these evaluations to determine the scope, depth, and timing of potential future inspections. At the conclusion of such a remote interactive evaluation, FDA provides establishments with written observations, as it would for an inspection. However, unlike what happens following an inspection, FDA does not issue inspection classifications for remote interactive evaluations.

Prior to the pandemic, FDA did not use remote interactive evaluations and, as of August 2021, FDA officials said the agency had not yet conducted any remote interactive evaluations of biologic establishments. Agency officials said that was because the agency is reviewing internal processes to help ensure implementation of remote interactive evaluations adequately provides the information needed to assess manufacturing quality.

Representatives of almost all biologic manufacturing associations we spoke to generally supported FDA’s use of alternative inspection tools both during the COVID-19 pandemic and in the future, but noted some challenges with the use of these tools. For example, representatives from three associations noted a lack of communication from FDA following record requests. According to FDA, the agency plans to revise its record request procedures in fiscal year 2022 to increase communication with manufacturers.

Representatives from three associations also noted a lack of clarity on whether the agency could use these alternative tools as substitutes for in-person inspections, such as to resolve findings from prior FDA inspections. FDA’s guidance does not state whether these alternative inspection tools may be used to resolve prior inspection findings. However, in a May 2021 FDA presentation to industry officials, the agency stated that they could be used in this way. FDA officials later told us that alternative inspection tools are not intended to replace inspections to resolve inspection findings and are reluctant to use these tools in lieu of an inspection.

FDA may face challenges resuming routine surveillance inspections of vaccine and allergenic manufacturing establishments, but said vaccine inspections are a priority. While inspections of vaccine and allergenic establishments represent a small number of total biologic inspections each year—2 percent in fiscal year 2019 (the last fiscal year prior to the pandemic)—inspections of these establishments are largely in foreign countries, such as the United Kingdom, Germany, and France. In contrast, inspections of other biologic product types, which comprise 98 percent of total biologic inspections, are mostly domestic (see figure below).

Number of FDA Inspections and Percentage of Foreign and Domestic Inspections by Biologic Product Type, Fiscal Year 2019

Note: Inspections may be double counted as they may be categorized as more than one biologic type.

In July 2021, FDA announced it resumed routine domestic surveillance inspections, thereby putting the agency in a position to begin to return to its prepandemic inspection rates for blood and blood components and tissue and gene therapy products manufacturing establishments. However, in August 2021, FDA officials stated that the agency was uncertain whether the ongoing pandemic will impose additional disruptions to the domestic inspection operations in the future.

In addition, FDA officials said the agency does not have a time frame for resuming routine foreign inspections, as of August 2021, which may affect its ability to conduct routine surveillance inspections for vaccine and allergenics manufacturing establishments. Officials said that the additional challenges with resuming foreign inspections, including travel restrictions and the length of time needed for trip planning, make it difficult to estimate when foreign surveillance inspections will resume.

According to FDA officials, vaccine inspections are a high priority for the agency. They said FDA is continuously examining which establishments to prioritize for surveillance inspections as determined by the agency’s risk-based approach. FDA officials said they are shifting resources to address the highest inspection priorities, including vaccine oversight. Further, if FDA determines that a foreign manufacturing establishment becomes a high enough risk—for instance, the establishment has not been inspected in the typical period of time—then the agency may designate that inspection as mission critical and conduct an inspection, according to FDA officials.

Methodology

To conduct this work, we reviewed FDA data on biologic inspections from October 1, 2011 through May 26, 2021 (the most recent data available), from the agency’s Field Accomplishments and Compliance Tracking System. We examined this time frame to provide a wide enough range to capture inspection activities over time. We also reviewed agency guidance and documents, as well as interviews and written responses from FDA officials related to the agency’s biologic oversight activities during the COVID-19 pandemic.

To assess the reliability of the inspection data, we conducted electronic data testing for missing data and outliers, reviewed relevant documentation, and obtained information from knowledgeable agency officials. We found the data sufficiently reliable for our purposes.

Additionally, we interviewed AABB (formerly known as the American Association of Blood Banks), Alliance for Regenerative Medicine, Association for Accessible Medicines, Biotechnology Innovation Organization, Pharmaceutical Research and Manufacturers of America, Pharma & Biopharma Outsourcing Association, and Plasma Protein Therapeutics Association, which represent blood centers and manufacturers of tissue and cell products, generic drugs and biosimilars, drugs and biologics, brand-name drugs and biologics, contract manufacturers, and plasma manufacturers, respectively, on the effects of the temporary postponement of inspections and FDA’s use of alternative tools.

Agency Comments

We provided the Department of Health and Human Services (HHS) and the Office of Management and Budget (OMB) with a draft of this enclosure. HHS provided technical comments, which we incorporated as appropriate. OMB did not provide comments on this enclosure.

GAO’s Ongoing Work

As FDA’s inspections of manufacturing establishments remain a critical tool to oversee the manufacturing quality of biologics and other drugs, even during the pandemic, we will continue to monitor FDA’s inspection program.

Related GAO Product

Drug Safety: FDA’s Future Inspection Plans Need to Address Issues Presented by COVID-19 Backlog. GAO-21-409T. Washington, D.C.: March 4, 2021.

Contact information: Mary Denigan-Macauley, 202-512-7114, deniganmacauleym@gao.gov

Health Insurance Loss

Estimates of employer-sponsored insurance suggest more than 3.1 million non-elderly adults lost their insurance during the COVID-19 pandemic; some losing this insurance were able to obtain an alternative source of coverage, though complete data are not yet available.

Entity involved: The Centers for Medicare & Medicaid Services, within the Department of Health and Human Services

Background

Many Americans receive health insurance through their employer, which is known as employer-sponsored insurance (ESI).[95] COVID-19 and the associated economic downturn likely caused disruptions in ESI for millions of Americans, although estimates of the magnitude of ESI loss vary. For those who lost ESI, there were a number of health coverage alternatives available, including the following options:
  • coverage through a federal or state health insurance exchange established under the Patient Protection and Affordable Care Act. Through federal and state health insurance exchanges, individuals can compare and select among plans that meet certain federal standards offered by participating private insurers.[96]
  • Medicaid. Medicaid is a joint federal-state health financing program for certain low-income and medically needy individuals.
  • benefits under the Consolidated Omnibus Budget Reconciliation Act of 1985 (COBRA) and COBRA-like provisions for state and local employees. COBRA provides certain individuals who lose their employer-sponsored health coverage with temporary access to continue it for limited periods of time under certain circumstances.
  • short-term, limited duration insurance. Short-term, limited duration insurance is a type of health insurance coverage that was primarily designed to fill temporary gaps in coverage and is generally exempt from federal health insurance requirements.
  • other sources of financial support for medical expenses. Other forms of financial support for medical expenses include health care sharing ministries, which are faith-based organizations that share resources for medical needs among their members but do not have to comply with federal health insurance requirements.

Congress included several provisions in COVID-19 relief laws to support access to health coverage, including for those who have lost ESI. For example, the American Rescue Plan Act of 2021 temporarily increases and expands eligibility for tax subsidies for individuals enrolled in coverage through a health insurance exchange.

Overview of Key Issues

ESI loss during the COVID-19-associated economic downturn. Though estimates vary widely, studies suggest millions likely lost their ESI during the COVID-19-associated economic downturn. Estimates of ESI loss range from 3.1 to 3.3 million non-elderly adults, or between 12 and 14.6 million workers and their dependents, depending on the methods used to develop the estimate and the time period and population studied (see table below).[97]

Selected Studies of Employer-Sponsored Insurance (ESI) Loss during the COVID-19-Associated Economic Downturn

Source and date published (month and year)

Title

Time period studied

ESI loss estimate a

Methods

Urban Institute and Robert Wood Johnson Foundation (November 2020)

ACA Offers Protection as the COVID-19 Pandemic Erodes Employer Health Insurance Coverage

March/April to September 2020

3.1 million non-elderly adults lost ESI

The authors used a nationally representative Internet-based survey designed to assess how the COVID-19 pandemic is affecting nonelderly adults and their families to examine the number of adults who lost ESI between March/April and September 2020.

Employee Benefit Research Institute and the Commonwealth Fund (October 2020)

How Many Americans Have Lost Jobs with Employer Health Coverage During the Pandemic?

The start of the COVID-19 pandemic (approximately February 2020) to June 2020

7.7 million workers and 6.9 million dependents, or 14.6 million people total, lost ESI

The authors merged health insurance coverage data with data on unemployment benefit recipients to estimate the number of jobs with ESI coverage that were lost as well as the number of dependents of these workers who potentially lost coverage.

Congressional Budget Office (CBO) (September 2020)

Federal Subsidies for Health Insurance Coverage for People Under 65: 2020 to 2030

All of calendar year 2020

3.9 million people under 65 would lose a job with ESI in the year 2020 (projection)

The authors used CBO’s health insurance simulation model. The model includes the most recent administrative and survey data on enrollment and premiums; recently enacted legislation, judicial decisions, or changes in regulations; and CBO’s most recent macroeconomic forecast.

Urban Institute and Robert Wood Johnson Foundation (September 2020)

As the COVID-19 Recession Extended Into the Summer of 2020, More Than 3 Million Adults Lost Employer-Sponsored Health Insurance Coverage and 2 Million Became Uninsured

April/May to mid-July 2020

3.3 million non-elderly adults lost ESI

The authors used the U.S. Census Bureau’s Household Pulse Survey to assess how health coverage changed among adults ages 18 to 64 between April/May and mid-July 2020.

The Economic Policy Institute (August 2020)

Health Insurance and the COVID-19 Shock

February to July 2020

6.2 million workers and 12 million people lost ESI

The authors merged data on net employment changes from the Bureau of Labor Statistics with estimates of ESI coverage by industry from the U.S. Census Bureau to generate estimates of access to ESI, based on industry employment changes.

Urban Institute and Robert Wood Johnson Foundation (July 2020)

Changes in Health Insurance Coverage Due to the COVID-19 Recession: Preliminary Estimates Using Microsimulation

April 2020 to December 2020

10.1 million people would lose ESI (projection)

The authors used their health insurance microsimulation model, which incorporated data on employment losses by industry and other characteristics published by the U.S. Department of Labor to project loss of ESI following loss of employment in the last three quarters of 2020, from April through December 2020.
Source: GAO summary of selected studies. | GAO-22-105051

Note: We reviewed a number of studies that provided a numerical estimate of ESI loss during the COVID-19-associated time period and selected to report several here that represent a range of data sources and methods for developing an ESI loss estimate, including surveys and simulation models.
aThese studies vary in population studied. “Non-elderly adults” refers to adults age 18 through 64; “workers” refers to employed people who receive ESI through their job; “dependents” refers to those who receive ESI through another person, such as a spouse or parent.

The Congressional Budget Office estimated that 14.3 million people would lose their jobs in 2020, but not all job losses would result in a loss of ESI.

ESI loss was likely less than originally expected:
  • Many people who lost their jobs during the COVID-19 pandemic had never been enrolled in ESI through their jobs. The highest COVID-19-related job loss has been seen in small companies and lower-wage industries less likely to offer health insurance, such as retail and food service.
  • Many individuals were able to retain their ESI while furloughed as the pandemic continued through 2020. According to a Bureau of Labor Statistics survey, 42 percent of establishments surveyed paid a portion of health insurance premiums for some or all furloughed employees while they were not working in calendar year 2020.[98]
  • Some job loss and any associated ESI loss may have been temporary. According to a Bureau of Labor Statistics survey, of the 13.5 million who reported not working in June 2020, 10.6 million (or 79 percent) expected to be recalled to work at some point.[99]

It is not yet clear how the COVID-19 pandemic has more recently affected ESI in 2021. A September 2021 study used data from U.S. Census Bureau surveys to estimate that nearly 3 million people lost ESI in 2020. However, based on its review of health care administrative data, the study estimated that many of the people who lost ESI and became uninsured during the spring and summer of 2020 may have eventually found an alternative source of coverage, particularly Medicaid, later in 2020 or in early 2021.[100]

Another recent study, a Commonwealth Fund survey fielded March through June 2021, found that 6 percent of working-age adults reported that they lost ESI because of a job loss during the COVID-19-associated time period; of those, 67 percent of those who reported losing ESI reported gaining other coverage.[101] Of those who lost ESI and gained other coverage, 20 percent reported they became insured through another ESI plan, 20 percent reported that they elected COBRA, 16 percent reported they gained Medicaid coverage, and 9 percent reported they gained coverage through an exchange plan.[102] Additional and updated estimates of the effect of the COVID-19-associated economic downturn on ESI may become available as new data from household surveys are released in late 2021 and 2022.

Health coverage alternatives for those losing ESI during the pandemic. Some of those losing ESI during the COVID-19 pandemic were able to obtain coverage through a health insurance exchange or Medicaid. Enrollment in other options, such as COBRA, may have also increased, but comprehensive data are not available.

Exchange coverage. Enrollment in exchange coverage increased during the COVID-19 pandemic, both during annual open enrollment periods available to all consumers and special enrollment periods available under certain circumstances.[103]

Plan selections during open enrollment in federal and state exchanges was at its highest level since 2017 during the 2021 open enrollment period, which occurred during the COVID-19 pandemic. (See figure.) The Centers for Medicare & Medicaid Services (CMS) data show that there were about 600,000 (about 5.2 percent) more plan selections during the 2021 open enrollment period than during the 2020 open enrollment period, which occurred before the COVID-19 pandemic.

Plan Selections during Open Enrollment Periods in Federal and State-Based Exchanges, 2017-2021

Note: Open enrollment periods for the federally facilitated exchanges are generally held between November 1 and December 15 the year prior to the coverage year. State-based exchanges may use different dates.

Special enrollment through the federally facilitated exchange was also higher in 2020, during the COVID-19 pandemic, than in any prior year data were collected.[104] Generally, special enrollment periods allow an individual to apply for health coverage after experiencing a qualifying event, such as losing minimum essential health coverage or getting married.

Compared to 2019, more than 300,000 (about 23 percent) more consumers obtained coverage through a special enrollment period in 2020.[105] Most of this increase resulted from consumers who qualified for the special enrollment period because of a loss of health insurance. Specifically, in 2020, there was a 293,563 (43 percent) increase in enrollments using a special enrollment period with loss of health coverage as the qualifying event compared to a 25,136 (3.7 percent) increase in enrollments among those using a special enrollment period who qualified for another reason. (See figure.)

Federal Exchange Special Enrollment by Qualifying Event, 2017-2020

Note: Generally, a special enrollment period is a period during which an individual who experiences certain qualifying events, such as losing of health coverage or having a child, may enroll in exchange coverage outside of the annual open enrollment period.

Furthermore, on January 28, 2021, the administration announced a new special enrollment period for the federally facilitated exchange in response to the COVID-19 public health emergency, which was available from February 15, 2021, through August 15, 2021. This special enrollment period was open to all individuals and no qualifying event was required to obtain coverage.[106] According to CMS, the new federal special enrollment period in response to COVID-19 was accompanied by an outreach campaign to raise awareness among the uninsured about it and about the availability of financial assistance to pay for premiums for those who qualified.

CMS reported that 2.1 million people obtained coverage through the federal exchange during this special enrollment period, exceeding total special enrollment in each prior coverage year.[107] Reasons for this increase in enrollment may include the availability of the 2021 special enrollment period open to all consumers and its associated outreach campaign, and provisions supporting exchange coverage in COVID-19 relief laws. For example, the American Rescue Plan Act of 2021 expanded eligibility for exchange subsidies to those making above 400 percent of the poverty level and also increased subsidies for those making between 100 and 400 percent of the poverty level for 2021 and 2022.

Medicaid. Medicaid enrollment increased 8.7 million, or 13.5 percent, between January 2020 and December 2020, according to data available from CMS. [108] (See figure below)

Medicaid Enrollment from January to December 2020

Note: Enrollment counts presented in this figure generally represent the total unduplicated number of individuals enrolled in comprehensive benefits as of the last day of the reporting period.

Part of the increase in Medicaid enrollment in 2020 may be due to more applications for Medicaid coverage as well as requirements in the Families First Coronavirus Response Act. The federal government matches states’ spending for Medicaid services according to a statutory formula known as the Federal Medical Assistance Percentage (FMAP). The Families First Coronavirus Response Act provided a temporary 6.2 percentage point increase in the Medicaid FMAP funding states receive if they meet certain conditions, including providing continuous coverage to Medicaid beneficiaries who were enrolled in Medicaid on or after March 18, 2020, regardless of any changes in circumstances or redeterminations at scheduled renewals that otherwise would result in termination, through the end of the month in which the public health emergency ends.[109]

COBRA. There are no comprehensive data for the time period associated with COVID-19 on the take-up of COBRA. Generally, the employee must elect COBRA coverage within a 60-day election period and must pay the full premium plus an administrative fee, which may be prohibitively expensive. In May 2020, the administration effectively extended the election period within which individuals must elect COBRA until 60 days after the end of the COVID-19 public health emergency. Additionally, for certain qualifying individuals, the American Rescue Plan Act of 2021 included a 100 percent subsidy for COBRA premiums from April through September 2021.

Short-term, limited duration insurance. There are limited data available for the time period associated with COVID-19 on sales of short-term, limited duration insurance plans sold to individuals. While it is prohibited in several states and in some states no insurers choose to offer it, most states had issuers offering short-term, limited duration insurance during 2020.

Other sources of financial support for medical expenses. While other sources of financial support for medical expenses may be available, such as health sharing ministries, there are no comprehensive federal data on general use of these arrangements during the time period associated with COVID-19, or on their use by those who lost ESI.

Methodology

For this work, we conducted a literature search to identify studies of ESI loss during the time period associated with COVID-19. We reviewed a number of studies that provided a numerical estimate of ESI loss during the COVID-19-associated time period and selected to report several that represent a range of data sources and methods for developing an ESI loss estimate, including surveys and simulation models. We reviewed CMS data and reports on enrollment in exchanges from 2017 to 2021 and on enrollment in Medicaid from January 2020 to December 2020. We assessed the reliability of these data using manual checks and discussions with CMS officials and determined they were sufficiently reliable for our purposes. We also reviewed reports about other sources of health coverage, such as COBRA, from government agencies and research organizations for descriptive information about health coverage options.

Agency Comments

We provided the Department of Health and Human Services (HHS) and the Office of Management and Budget (OMB) with a draft of this enclosure. HHS provided technical comments, which we incorporated as appropriate. OMB did not provide us with comments on this enclosure.

GAO’s Ongoing Work

GAO will continue to assess the effect of the COVID-19-associated economic downturn on ESI and examine health coverage options.

Contact information: John Dicken, (202) 512-7114, dickenj@gao.gov

HHS COVID-19 Funding

The Department of Health and Human Services was appropriated approximately $484 billion in COVID-19 relief funds. The Department reported that it had obligated about $351 billion and expended about $196 billion of this amount—about 72 percent and 40 percent, respectively—as of August 31, 2021.

Entity involved: The Department of Health and Human Services.

Background

The Department of Health and Human Services (HHS) received approximately $484 billion in COVID-19 relief appropriations from six COVID-19 relief laws enacted as of August 31, 2021. HHS COVID-19 relief funds may be used for a range of purposes, such as assistance to health care or child care providers, testing, therapeutic, or vaccine-related activities, or procurement of critical supplies. Many HHS COVID-19 relief funds are available for a multiyear period or are available until expended.

Overview of Key Issues

As of August 31, 2021, of the approximately $484 billion in COVID-19 relief funds appropriated, HHS reported that it had obligated about $351 billion and expended about $196 billion—about 72 percent and 40 percent, respectively (see figure below).

HHS-Reported COVID-19 Relief Appropriations, Obligations, and Expenditures from COVID-19 Relief Laws, as of August 31, 2021

aThese amounts reflect appropriations provided in Divisions M and N of the Consolidated Appropriations Act, 2021 that are specifically designated for COVID-19 relief.

The table below shows HHS appropriations, obligations, and expenditures by COVID-19 relief law that HHS reported as of August 31, 2021.
HHS-Reported COVID-19 Relief Appropriations, Obligations, and Expenditures, by Relief Law, as of August 31, 2021

Legislation

Date of enactment

Appropriations
($ in millions)

Obligations
($ in millions (% obligated))

Expenditures
($ in millions (% expended))

Coronavirus Preparedness and Response Supplemental Appropriations Act, 2020
(Pub. L. No. 116-123)

March 6, 2020

6,497

5,785 (89)

3,655 (56)

Families First Coronavirus Response Act
(Pub. L. No. 116-127)

March 18, 2020

1,314

1,307 (99)

1,261 (96)

CARES Act
(Pub. L. No. 116-136)a

March 27, 2020

142,833

136,091 (95)

119,656 (84)

Paycheck Protection Program and Health Care Enhancement Act
(Pub. L. No. 116-139)

April 24, 2020

100,000

58,387 (58)

50,721 (51)

Consolidated Appropriations Act, 2021
(Pub. L. No. 116-260)b

December 27, 2020

73,175

57,970 (79)

11,943 (16)

American Rescue Plan Act of 2021
(Pub. L. No. 117-2)

March 11, 2021

160,494

91,210 (57)

8,796 (5)

Total

484,313

350,750 (72)

196,032 (40)
Source: Department of Health and Human Services (HHS) data. | GAO-22-105051

Note: The Department of Health and Human Services (HHS) reported that, of its total appropriations for COVID-19 relief, the agency transferred $289 million to the Department of Homeland Security that is not included in the reported obligations or expenditures, and that $300 million in appropriations are not available until HHS has taken certain actions.
aHHS reported that it transferred $289 million from CARES Act appropriations to the Department of Homeland Security and this amount is not included in HHS’s reported obligations or expenditures.
bThis amount reflects appropriations provided in Divisions M and N of the Consolidated Appropriations Act, 2021 that are specifically designated for COVID-19 relief. An additional $638 million in COVID-19 relief funds were appropriated under Division H to the Administration for Children and Families, an agency within HHS, to prevent, prepare for, and respond to the coronavirus, for necessary expenses for grants to carry out a low-income household drinking water and wastewater emergency assistance program. However, these funds were not included in the HHS-reported data on HHS COVID-19 relief appropriations, obligations, and expenditures, as HHS noted that the funds were not considered COVID-19 relief funding for USAspending.gov reporting purposes.

The table below shows allocations, obligations and expenditures of COVID-19 relief appropriations made to HHS under the six relief laws by HHS agency or fund as of August 31, 2021.
HHS-Reported Allocations, Obligations, and Expenditures of COVID-19 Relief Funding, by Agency or Key Fund, as of August 31, 2021

Agency or key fund

Allocations
($ millions)

Obligations
($ millions)

Expenditures
($ millions)

Administration for Children and Families

65,054.0

64,253.2

10,094.8

Administration for Community Living

3,200.0

2,990.6

1,031.5

Agency for Toxic Substances and Disease Registry

12.5

12.5

9.5

Centers for Disease Control and Prevention

27,770.0

18,692.3

4,332.7

Centers for Medicare & Medicaid Servicesa

935.0

138.0

80.3

Enhanced Use of Defense Production Act

10,000.0

2,043.2

33.0

Food and Drug Administration

718.0

145.2

50.1

Health Resources and Services Administration

11,729.8

9,014.3

2,595.3

Indian Health Service

7,980.0

4,425.9

4,208.1

National Institutes of Health

3,977.4

2,259.7

1,230.0

Office of Inspector General

17.0

4.7

3.9

Public Health and Social Services Emergency Fund (PHSSEF)b

344,684.7

240,005.1

172,124.6
Office of the Assistant Secretary for Healthc

7,206.0

5,011.7

3,888.0
Office of the Assistant Secretary for Preparedness and Responsec

28,013.1

14,375.5

8,358.9
Biomedical Advanced Research and Development Authorityc

38,246.8

30,694.0

13,335.9
Provider Relief Fundc, d

178,000.0

135,652.2

132,469.9

Other PHSSEFc

93,218.8

54,271.7

14,071.9

Substance Abuse and Mental Health Services Administration

8,235.0

6,764.9

238.1

Grand Total

484,313.4

350,749.6

196,031.9
Source: Department of Health and Human Services (HHS) data. | GAO-22-105051

Note: For the purpose of this table, the term allocation includes both direct appropriations and transfers between HHS agencies. For example, according to HHS, the agency transferred $860 million to the Administration for Children and Families’ Unaccompanied Children Program from National Institutes of Health appropriations provided in the Consolidated Appropriations Act, 2021, Pub. L. No. 116-260, 134 Stat. 1182, 1913 (2020), citing the Secretary’s authorities under that act. HHS reported that of its total appropriation for COVID-19 relief, the agency transferred $289 million to the Department of Homeland Security that is not included in the reported obligations or expenditures, and that $300 million in appropriations are not available until HHS takes certain actions. With respect to the Consolidated Appropriations Act, 2021, the amounts reflect appropriations specifically designated for COVID-19 in Divisions M and N of the act.
aThese amounts do not reflect Medicaid and Medicare expenditures that resulted from statutory changes to these programs under the COVID-19 relief laws.
bPHSSEF is an account through which funding is provided to certain HHS offices, such as the Office of the Assistant Secretary for Preparedness and Response. Amounts have been appropriated to this fund for the COVID-19 response to support certain HHS agencies and response activities. Amounts appropriated to the PHSSEF and transferred to agencies within HHS listed in the table are included in the allocation amounts for the specified receiving agencies. For example, the National Institutes of Health (NIH) received about $1.8 billion in transfers from the PHSSEF and this amount is included in the NIH allocation listed above, and not in the PHSSEF total.
cThe italicized amounts are subtotals of the PHSSEF and are already reflected in amounts listed for the PHSSEF.
dThe Provider Relief Fund reimburses eligible health care providers for health care-related expenses or lost revenues that are attributable to COVID-19. Provider Relief Fund expenditures also may be referred to as disbursements.

HHS reported allocations, obligations, and expenditures of appropriations from the six COVID-19 relief laws for a variety of COVID-19 response activity categories (see table). When response activities had spending related to multiple categories, they were only assigned to one. For example, certain funds for testing and vaccine distribution were included in the response activity category for support to states, localities, territories, and tribal organizations rather than in the testing or vaccine activity categories. HHS officials noted that allocations for COVID-19 response activities are determined by appropriations made by Congress in combination with approved spend plan decisions. The timing of obligations and expenditures of allocations for response activities can vary due to a variety of factors, including the timing of the appropriations, and the planned uses of funds. For example, some research programs are planned in phases, which affects the timing of the release of the funds.
HHS-Reported Allocations, Obligations, and Expenditures by Selected COVID-19 Response Activity, as of August 31, 2021

COVID-19 response activity

Description

Allocations
($ in millions)

Obligations
($ in millions)

Expenditures
($ in millions)

Provider Relief Funda

Includes reimbursements to eligible health care providers for health care-related expenses or lost revenues that are attributable to COVID-19.

178,000.0

135,652.2

132,469.9

Testing

Includes procurement and distribution of testing supplies, community-based testing programs, testing in high-risk and underserved populations and Indian Health Services’ programs, screening in schools, Centers for Disease Control and Prevention (CDC) testing-related activities such as technical assistance, and other activities.

61,416.3

27,678.2

9,359.5

Child Care and Development Fundb

Includes funding for states and other governments for child care subsidies for eligible families and quality improvement activities, sub-grants to child care providers to stabilize the child care market, and payments for child care assistance.

52,465.0

52,441.5

6,985.2

Vaccines

Includes Biomedical Advanced Research and Development Authority (BARDA) funding for vaccine development and procurement; National Institutes of Health (NIH) research activities; and CDC vaccine distribution, administration, and technical assistance related activities.

40,039.9

31,857.1

9,462.7

Support to state, local, territorial, and tribal organizations’ preparedness

Includes funding for states and other governments to support testing, contact tracing, and surveillance; vaccine distribution; and other activities.

40,084.3

39,467.6

9,679.9

Strategic National Stockpile

Includes funds for acquiring, storing, and maintaining ventilators, testing supplies, and personal protective equipment (PPE) and increasing manufacturing capacity for certain PPE.

13,919.9

10,439.7

6,987.3

Drugs and therapeutics

Includes BARDA funding for development and procurement of therapeutics and NIH research activities.

11,459.2

7,068.8

4,861.4

Health centers

Includes support for COVID-19-related activities, such as testing, at health centers, which provide health care services to individuals regardless of their ability to pay.

9,620.0

8,533.7

2,358.2

Rural Provider Payments

Includes assistance for rural providers and suppliers that will be administered using the same mechanism as the Provider Relief Fund, with disbursement of funds anticipated to begin in approximately the fourth week of November 2021, according to HHS officials.

8,500.0

0.0

0.0

Mental health and substance use–related services

Includes substance abuse prevention and treatment, community-based mental health services, and other activities.

8,315.0

6,777.7

238.1

Diagnostics research and development

Includes BARDA diagnostic development programs and NIH projects, such as the Rapid Acceleration of Diagnostics Initiative.

3,382.1

1,828.1

953.7

Head Start

Includes grants to local programs for high-quality learning experiences and to respond to other immediate and ongoing consequences of COVID-19.

2,000.0

1,966.9

603.3

Testing for uninsuredc

Includes reimbursements to eligible providers for COVID-19 testing for individuals who are uninsured.

2,000.0

1,998.3

1,973.2

Global disease detection and emergency response

Includes support to governments and other organizations to rapidly diagnose cases and to ensure readiness to implement vaccines and therapeutics.

1,550.0

609.4

195.7

Telehealth

Includes efforts to support safety-net health care providers transitioning to telehealth, telehealth access—especially for vulnerable maternal and child health populations—and a telehealth website.

301.7

152.0

128.9

Other response activitiesd

Includes additional activities such as activities conducted by the Administration for Community Living, certain CDC-wide activities and program support, and activities conducted by the Food and Drug Administration.

51,260.0

24,278.4

9,774.9

Total

484,313.4

350,749.6

196,031.9
Source: Department of Health and Human Services (HHS) data, written HHS responses, and GAO analysis of HHS spend plans. | GAO-22-105051

Notes: The selected response activities represent examples of certain targeted activities that fall within particular HHS agencies, such as funding for health centers or Head Start, as well as broader categories of response activities that may span HHS agencies, such as testing-, vaccine-, and therapeutics-related response activities.
HHS reported allocations, obligations, and expenditures for these activities based on the primary programmatic recipient organization of the funds, although some activities apply to multiple categories. For example, certain funds in the “support to state, local, territorial, and tribal organizations for preparedness” category were provided for testing but are not reflected in the “testing” category. However, HHS also noted that testing-related funding awarded to states or localities that was appropriated under the American Rescue Plan Act of 2021 (ARPA) was included in the “testing” category. HHS officials explained that the activity names align with how funds were appropriated under different COVID-19 relief laws.
According to HHS officials, the allocations reported for the key activities above are based on amounts appropriated for these activities in the COVID-19 relief laws, HHS transfers of funds, and approved spend plan decisions made by HHS in coordination with the Office of Management and Budget. According to HHS, the agency used about $1.7 billion in appropriations provided under ARPA, including $1.2 billion appropriated for COVID-19 testing, contact tracing, and mitigation activities, for the Administration for Children and Families’ Unaccompanied Children Program, citing the Secretary’s authorities under the Public Health Service Act and the Consolidated Appropriations Act, 2021. See Pub. L. No. 116-260, div. H, tit. II, § 204, 134 Stat. 1182, 1589 (2020); 42 U.S.C. 238j(a). With respect to the Consolidated Appropriations Act, 2021, the amounts reflect appropriations specifically designated for COVID-19 in Divisions M and N of the act. HHS reported that, of its total appropriation for COVID-19 relief, the agency transferred $289 million to the Department of Homeland Security that is not included in the reported obligations or expenditures.
aFor additional information about Provider Relief Fund allocations and disbursements, see the Relief for Health Care Providers enclosure.
bThe Child Care and Development Fund is made up of two funding streams: mandatory and matching funding authorized under section 418 of the Social Security Act, and discretionary funding authorized under the Child Care and Development Block Grant Act of 1990, as amended. See 42 U.S.C. §§ 618 and 9858m.
cAccording to HHS officials, HHS has allocated an additional $4.8 billion to the testing for the uninsured program from section 2401 of ARPA, which HHS included in the “testing” response activity category.
dAccording to HHS officials, the agency transferred $860 million from NIH appropriations for research and clinical trials related to long-term studies of COVID-19 and $850 million from the Public Health and Social Services Emergency Fund, Strategic National Stockpile, to the Administration for Children and Families’ Unaccompanied Children Program citing authority provided in section 304 of the Consolidated Appropriations Act, 2021 for both transfers. See Pub. L. No. 116-260, div. M, tit. III, § 304, 134 Stat. at 1913, 1916, 1923 (2020).

Methodology

We requested, and HHS provided, data on appropriations, allocations, obligations, and expenditures of COVID-19 relief funds by HHS agency and by selected response activity, as of August 31, 2021. We also reviewed appropriation warrant information provided by the Department of the Treasury as of August 31, 2021. To assess the reliability of the data reported by HHS, we reviewed HHS documentation; Department of the Treasury appropriation warrant information; and other available information on HHS’s use of COVID-19 relief funds. We did not independently validate the data provided by HHS. We determined that the HHS-reported data were sufficiently reliable for the purposes of our reporting objective. We also reviewed the six COVID-19 relief laws to assist the response to COVID-19.

Agency Comments

We provided HHS and the Office of Management and Budget (OMB) with a draft of this enclosure. HHS provided technical comments, which we incorporated as appropriate. OMB did not provide comments on this enclosure.

GAO’s Ongoing Work

We will continue to examine HHS’s use of COVID-19 relief appropriations contained in COVID-19 relief laws.

GAO’s Prior Recommendation

The table below presents our recommendation related to HHS COVID-19 funding from a prior quarterly CARES Act report.
Prior GAO Recommendation Related to Department of Health and Human Services (HHS) COVID-19 Funding

Recommendation

Status

To communicate information about and facilitate oversight of the agency’s use of COVID-19 relief funds, the Secretary of Health and Human Services should provide projected time frames for the planned spending of COVID-19 relief funds in the Department of Health and Human Services’ spend plans submitted to Congress. (July 2021 report).

Open—not addressed. HHS partially concurred with the recommendation and stated that the department would aim to incorporate some time frames on planned spending where that information may be available such as time frames for select grants to states. However, HHS stated that the department would not be able to provide specific time frames for all relief funds since the evolving environment requires the department to remain flexible in responding to incoming requests for response activities. As of September 2021, we are awaiting updates from the agency.
Source: GAO. I GAO-22-105051

Contact information: Carolyn L. Yocom, (202) 512-7114, yocomc@gao.gov

Relief for Health Care Providers

As of August 31, 2021, the Department of Health and Human Services had disbursed payments to providers totaling about $132.5 billion (about 74 percent) of the $178 billion appropriated by COVID-19 relief laws to the Provider Relief Fund. Health and Human Services has begun payment integrity efforts but lacks time frames to help ensure that post-payment oversight keeps pace with the distribution of Provider Relief Funds and the agency can expeditiously determine whether payments were appropriately made, used, and recovered as warranted.

Entities involved: Department of Health and Human Services, including its Health Resources and Services Administration

Recommendation for Executive Action

The Administrator of the Health Resources and Services Administration should establish time frames for completing post-payment reviews to promptly address identified risks and identify overpayments made from the Provider Relief Fund, such as payments made in incorrect amounts or payments to ineligible providers.

The Administrator of the Health Resources and Services Administration should finalize procedures and implement post-payment recovery of any Provider Relief Fund overpayments, unused payments, or payments not properly used.

HHS partially concurred with both recommendations. HRSA stated that it has a schedule for reviewing the payment discrepancy types it initially prioritized, and that reviews for the remaining discrepancy types and payment recovery efforts will occur in the future. We maintain that time frames are still needed for implementing recovery efforts.

Background

Relief funds to health care providers have been allocated and disbursed by Health and Human Services (HHS) through the following programs.

Provider Relief Fund. To respond to the pandemic, three of the six COVID-19 relief laws appropriated a total of $178 billion to the Provider Relief Fund (PRF) to reimburse eligible providers for health care-related expenses or lost revenues attributable to COVID-19. Specifically,
  • the CARES Act appropriated $100 billion;
  • the Paycheck Protection Program and Health Care Enhancement Act appropriated $75 billion; and
  • the Consolidated Appropriations Act, 2021, appropriated $3 billion for this purpose.[110]

HHS’s Health Resources and Services Administration (HRSA) administers payments from the PRF, including allocations to the COVID-19 Uninsured Program and the COVID-19 Coverage Assistance Fund. In addition to the PRF, the American Rescue Plan Act of 2021 appropriated $8.5 billion for payments to eligible rural health care providers for health care related expenses and lost revenues that are attributable to COVID-19.[111]

HRSA’s planned oversight for the PRF includes post-payment (1) analysis and reviews to determine whether HRSA made PRF payments to eligible providers in the correct amounts, (2) audits to determine whether PRF funds were used by providers in accordance with laws and agency guidance, and (3) recovery of overpayments, unused payments, and payments not properly used.

Accelerated and Advance Payments. HHS’s Centers for Medicare & Medicaid Services (CMS) Accelerated and Advance Payments Program provides loans to active Medicare providers and suppliers. Section 3719 of the CARES Act authorized, due to the COVID-19 pandemic, the expansion of this program, though no new loans have been made since January 2021 as they relate to the COVID-19 pandemic. Of the $107.3 billion in COVID-19 related loans disbursed under the program as of September 7, 2021, $36.3 billion in repayments have been made by providers and suppliers and the current outstanding loan balance for the program is $71.0 billion. The remainder of this enclosure addresses the PRF and other distributions.

Overview of Key Issues

Provider Relief Fund allocations, disbursements, and returned funds. As of August 31, 2021, HHS had allocated $153.9 billion of the $178 billion appropriated to the PRF. Of that $153.9 billion allocated, HHS had disbursed about $132.5 billion, and about $21.5 billion remained to be disbursed. HHS allocated PRF funds, in phases, for general relief to health care providers, relief for seven targeted areas, and “other distributions,” including funding for treatment, testing, and vaccine administration, as well as administration of the program. Specifically, the PRF allocations included $72.4 billion for general distributions to health care providers; about $55.8 billion for targeted distributions to certain types of providers and facilities; and $25.8 billion for “other distributions.”

Approximately $24.1 billion of additional PRF funds remained unallocated and undisbursed, as of August 31, 2021. On September 10, 2021, HHS announced that $17 billion of the previously unallocated $24.1 billion would be allocated as part of Phase IV general distributions to a broad range of providers who could document COVID-related revenue loss and expenses between July 1, 2020 and March 31, 2021. HRSA opened up the application period for these funds on September 29, 2021, and expects to begin disbursing these funds in December 2021. According to HRSA officials, the remaining unallocated funds are reserved for future contingencies and emerging needs for the Uninsured Program.

See table below for a summary of PRF allocations and disbursements as of August 31, 2021.
Provider Relief Fund: Summary of Allocations and Disbursements, as of August 31, 2021

Description

Allocation
($ in billions)

Date of initial disbursement

Disbursement
($ in billions)
a

General distributions

Phase I: Medicare

42.816

April 10, 2020

42.282

Phase II: Medicaid and Children’s Health Insurance Program (CHIP) providers

3.678

July 3, 2020

3.309

Phase II: dental providers

1.002

July 28, 2020

0.997

Phase II: assisted living facilitiesb

0.405

September 25, 2020

0.380

Phase III: general distribution

24.500

November 14, 2020

17.362

Subtotal of general distributions

72.401

64.330

Targeted distributions

Rural health care facilities

10.990

May 6, 2020

10.963

High-impact hospitalsc

20.685

May 7, 2020

20.668

Skilled nursing facilities

4.785

May 22, 2020

4.781

Indian health care providers

0.520

May 29, 2020

0.510

Safety net hospitals

13.074

June 12, 2020

12.907

Children’s hospitals

1.063

August 20, 2020

1.062

Nursing home infection control, quality, and performance

4.650

August 27, 2020

4.496

Subtotal of targeted distributions

55.767

55.387

Subtotal of general and targeted distributions

128.168

119.717

Other distributions

Treatment, testing, and vaccine administration for the uninsured and underinsuredd

10.000

May 15, 2020

6.193

Vaccine and therapeutic development and procurement activities

14.801

November 25, 2020

6.484

Administration

0.980

n/a

0.076

Subtotal other distributions

25.781

12.753

Unallocated fundse

24.051

n/a

0.000

Total Provider Relief Fund

178.000

132.470
Legend: n/a = not applicable
Source: Summary of Department of Health and Human Services funding data. | GAO-22-105051

aProvider Relief Fund disbursements may also be referred to as expenditures.
bIn March 2021, we reported that assisted living facilities were disbursed funds as part of Phase III. In May 2021, Health Resources and Services Administration (HRSA) officials told us that these funds were disbursed as part of phase II.
cHigh-impact hospitals are hospitals that have a high number of confirmed COVID-19 inpatient admissions.
dHRSA covers treatment, testing, and administering the vaccine for the uninsured through its COVID-19 Uninsured Program. In May 2021, HRSA announced that it would cover the cost of administering the vaccine for the underinsured through its COVID-19 Coverage Assistance Fund.
eHRSA officials told us that the amount of unallocated funds are available for other Provider Relief Fund allocations. On September 10, 2021, HHS announced that $17 billion of the previously unallocated $24.1 billion would be allocated as part of Phase IV general distributions to a broad range of providers who could document COVID-related revenue loss and expenses. According to HRSA officials, the remaining unallocated funds are reserved for future contingencies and emerging needs. HHS also refers to unallocated funds as reserved funds.

Fund disbursements and returned funds. According to our analysis of information provided by HRSA, as of August 31, 2021, HHS had disbursed about $64.3 billion from general distribution allocations, about $55.4 billion from the targeted allocations, and $12.8 billion for other distributions.[112] As of August 31, 2021, about 431,163 providers have received 674,549 payments made from the PRF.

Examples of disbursements from the PRF illustrate some of the variation in amounts and purposes for which the funds were disbursed:
  • Providers enrolled in Medicare—some of which were also enrolled in Medicaid or the Children’s Health Insurance Program (CHIP)—received, on average, approximately $150,000 in relief funds under Phase I of the general distributions. The average COVID-19 relief disbursement for providers solely enrolled in Medicaid and CHIP was approximately $58,000, distributed through Phase II of the general distributions, beginning July 3, 2020. HRSA officials noted that providers solely enrolled in Medicaid and CHIP tended to be smaller entities with lower revenue than providers also enrolled in Medicare.
  • As of August 31, 2021, approximately $6.2 billion from the PRF had been disbursed for COVID-19 treatment, testing, and vaccine administration of uninsured and underinsured individuals.[113] In addition to the allocation from the Provider Relief Fund for treatment, testing, and vaccine administration for uninsured individuals, the Families First Coronavirus Response Act and the Paycheck Protection Program and Health Care Enhancement Act each appropriated $1 billion to reimburse providers for the testing of uninsured individuals.[114]

Providers return funds on a regular basis. HRSA officials explained that providers may return funds if they believe
  • the original payment calculation sent to them was too high or they expect a reissuance of a different amount from HRSA—possibly a corrected lower amount or a reissuance to a different entity in their health care system—or
  • the funds were not needed, and they have no intention of receiving a new amount through a reissued payment.

According to HRSA officials, their system does not have a field for providers to indicate their reasons for returning funds.[115] Further, providers can return funds at any time.

According to HRSA, providers had returned about $8.8 billion from previous disbursements as of August 31, 2021, with about 75 percent ($6.6 billion of $8.8 billion) from general distributions, and about 25 percent ($2.2 billion of $8.8 billion) from targeted distributions.[116] In general, no funds were returned from providers from the “other distributions.”[117] When funds are returned, the disbursement totals reported are calculated after deducting the returned funds. Officials explained that the returned funds are not included in the disbursement totals shown in the above table, and are available for subsequent allocations.[118] For example,
  • nearly three quarters (about 69 percent, $6.1 billion of $8.8 billion) of all returned funds were returned to HRSA based on Phase I Medicare payments, which were initially disbursed beginning on April 10, 2020; and
  • about 14 percent or $1.2 billion of returned funds was returned after being disbursed as part of the targeted allocation for high-impact hospitals—those with a high number of confirmed COVID-19 inpatient admissions—which were initially disbursed beginning on May 7, 2020.

Provider Relief Fund payment integrity. While HRSA has taken actions to initiate PRF oversight, the agency has not established time frames to help ensure that its oversight keeps pace with the distribution of PRF funds and that HRSA expeditiously completes post-payment analysis and reviews, and recovery efforts to ensure that
  • relief payments made by HRSA only went to eligible providers in the correct amounts (post-payment analysis and reviews), and
  • any overpayments, unused payments, or payments not properly used are recovered as soon as possible (recovery).

Federal internal control standards state that management should design control activities to respond to identified risks and achieve objectives. As part of these standards, management designs specific actions to respond to the program’s risks, including the potential for fraud, on a timely basis.[119] These standards also state that management should define objectives, including clearly defining what is to be achieved, and the time frames for achievement. HRSA’s risk assessment plan for the PRF, dated September 30, 2020, identifies specific risks associated with disbursing funds to providers for use.

Post-payment review and analysis of relief payments made by HRSA. As of September 2021, HRSA was implementing a post-payment analysis and review process to identify overpayments from the nearly $120 billion in PRF general and targeted distributions—payments that were made in incorrect amounts or to ineligible providers. However, we found that agency documents did not specify time frames for implementing and completing all the remaining post-payment analysis and reviews. Further, in September 2021, agency officials provided documentation of time frames set through the first quarter of calendar year 2022, but officials told us that schedules beyond this date have not been set.

HRSA has developed a post-payment manual that includes procedures for post-payment analysis and reviews, as well as a post-payment matrix for scheduling and tracking the reviews. Officials told us in September 2021 that the draft was finalized and implemented in December 2020, and noted that the manual is evolving, with 11 versions documented between December 2020 and August 2021. In the matrix, HRSA has identified 54 types of payment discrepancies for review, and officials told us that they began pilot reviews in October 2020. HRSA officials told us that they define payment discrepancy types by reviewing provider data and PRF payment calculations to identify potential overpayments.[120]

In September 2021, HRSA provided us information that it was continuing to work on reviews and that it had closed post-payment reviews for six of the 54 payment discrepancy types identified. Officials told us that HRSA started with reviews of payment discrepancy types identified as a priority. Furthermore, they told us that some of the discrepancy types may not require review, and others will only be reviewed after the prioritized discrepancy types are closed.

According to HRSA officials, they have begun, but not completed, setting time frames for the remaining reviews. As of September 15, 2021, of the 48 payment discrepancy types remaining (54 total minus six closed), reviews for 19 are currently either underway or scheduled through the first quarter of 2022.[121] According to HRSA and agency documents, time frames for implementing reviews for the other 29 payment discrepancy types have not been specified. HRSA officials stated that due to the interdependencies of the payment discrepancy types, schedules beyond the first quarter of 2022 have not been made to date. However, establishing time frames for all payment discrepancy types, regardless of their interdependencies, will assist the agency in tracking the pace of its completion of reviews and assessing its progress in oversight and recovery efforts.

In addition to reviewing payment discrepancies, HRSA also reported taking action to address circumstances the agency identified in its risk assessment plan, which is currently being updated. In particular, HRSA reported that it was implementing reviews to address certain circumstances the agency identified in its risk assessment plan as having a high risk of occurring, such as:[122]
  • Erroneous payments to providers with multiple taxpayer identification numbers. HRSA guidance allows provider organizations with multiple taxpayer identification numbers (TINs) to apply for, receive, and transfer PRF payments among both parent and subsidiary organizations for up to 1,200 subsidiary TINs. Such a high volume of TINs could make it difficult for HRSA to calculate and distribute PRF funds appropriately based on TINs.
  • Overpayments to providers with a change in ownership. HRSA guidance to providers states that for those providers with a change in ownership, the original recipient must use funds for eligible expenses and lost revenues and return unused funds to HHS; the PRF funds do not transfer to the new owner. HRSA guidance states that providers that have not received payments under the PRF due to issues related to change of ownership will be eligible to apply for future PRF payments. However, ensuring the appropriate distribution of funds requires actions by HRSA to ensure that funds unused by the original recipient are tracked and returned.

Audit of providers’ use of payments. HRSA officials provided us an audit strategy manual dated September 30, 2021, that it says will guide the agency’s audits to determine whether providers complied with the requirements for the use of PRF funds, specifically that they used payments to cover only COVID-19 eligible expenses or related revenue losses not reimbursed from other sources in accordance with laws and HRSA guidance.[123]

HRSA officials noted that they would schedule their audits to coincide with the receipt of the first round of provider reports, which were due by September 30, 2021.[124] However, on September 10, 2021, HRSA announced that a 60-day grace period would be applied to the first reporting deadline, potentially delaying the submission of provider reports to as late as November 30, 2021. HRSA will not be able to use provider reports to determine whether funds were used appropriately until provider reports are received.

Recovery of overpayments, unused payments, and payments not properly used. HRSA officials told us that as of August 2021, they were in the process of planning to recover funds where they identify payment discrepancies. At that time, the officials reported that they had completed reviews for two of the 54 payment discrepancy types (representing 125 TINs) identified and recovered about $2.9 million (about 20 percent) of $15.1 million in potential overpayments identified for recovery.[125] For another eight payment discrepancy types (representing 3,048 TINs), agency documentation also identified an additional $356.4 million for recovery, but action to recover those funds had not been taken as of August 2021.[126] For the remaining 44 payment discrepancy types, overpayments have not yet been identified for recovery. In addition, HRSA has not yet identified unused payments or payments not properly used for recovery. In September 2021, HRSA officials told us that to more efficiently recover overpayments, they are planning to offset or reduce future PRF payments to be made at the end of 2021 by identified overpayment amounts, rather than incurring administrative costs associated with recovering funds directly from providers. However, some providers that received overpayments may not apply for future PRF payments, which could delay recovery of funds. Documenting overpayment amounts and beginning recovery efforts as soon as possible will increase the likelihood of recovering overpayments.

Without timely post-payment oversight to help ensure that relief payments are made only to eligible providers in correct amounts, HHS cannot fully address its stated payment integrity risks for the PRF and seek to recover overpayments. Similarly, unused payments or payments not properly used, if not identified through post-payment oversight, are at risk of not being recovered. Setting time frames for completion of these oversight efforts can help the agency achieve its objectives and increase the likelihood of recovering funds.

Methodology

To conduct our work, we examined publicly released HHS information, federal laws and agency guidance, and obtained information from CMS and HRSA in the form of written responses to questions, documents (including payment integrity oversight materials), and a dataset. Our review of the data sources provides reasonable assurance of the data’s reliability. The Provider Relief Fund dataset, which includes disbursements as of August 31, 2021, came from HRSA, which is the only available source for the disbursement data. The allocation amounts and categories that were provided by HRSA match publicly available information. CMS provided data on the current status for loans and repayments under the COVID-19 Accelerated and Advance Payments Program, as of September 7, 2021.

Agency Comments

We provided HHS and the Office of Management and Budget (OMB) with a draft of this enclosure. HHS provided written comments, reproduced in Appendix IV and technical comments on this enclosure, which we incorporated as appropriate. OMB did not provide comments on this enclosure.

HHS partially concurred with both recommendations. HRSA stated that it has a schedule for reviewing the payment discrepancy types it initially prioritized, and reviews for the remaining discrepancy types will occur after HRSA completes review of the prioritized discrepancy types. In addition, HRSA stated that recovery of payments not properly used cannot begin until after the provider reporting grace period ends on November 30, 2021, and recovery of unused payments cannot begin until January 1, 2022—another 30 days after the grace period ends. However, we believe that review of reports and recovery could start earlier, since HRSA officials told us in September 2021 that they were already receiving provider reports. Regardless, establishing time frames for completing reviews of all payment discrepancy types and implementing recovery efforts expeditiously will help the agency succeed in recovering overpayments.

GAO’s Ongoing Work

As HHS works to distribute funds for COVID-19 relief activities and to eligible providers, it will continue to be important that HHS officials ensure funds are appropriately distributed and used. We plan to conduct additional work examining HHS’s COVID-19 relief funds, including payment oversight and funds returned by providers.

GAO’s Prior Recommendation

The table below presents our recommendation related to a post-payment review process for the Uninsured Program, funded from the PRF, from a prior quarterly report.
Prior GAO Recommendation Related to Department of Health and Human Services (HHS) Relief to Providers

Recommendation

Status

The Secretary of Health and Human Services should finalize and implement a post-payment review process to validate COVID-19 Uninsured Program claims and to help ensure timely identification of improper payments, including those resulting from potential fraudulent activity, and recovery of overpayments. (March 2021 report)

Open—partially addressed. HHS agreed with our recommendation to finalize and implement a post-payment review process. In July 2021, HHS stated it is currently developing the post-payment review audit strategy for the Uninsured Program, which includes detailed protocol and procedures for the assessments of the Uninsured Program to be executed by audit contractors. While the Uninsured Program post-payment review strategy is being developed, HHS has also developed an interim process with standard operating procedures. HHS officials added that all claims determined to have been paid to ineligible providers or providers that in any way did not comply with the program terms and conditions, will be required to return the funds. We will continue to monitor the implementation of this recommendation to ensure that these efforts continue.
Source GAO. I GAO-22-105051

Related GAO Products

Standards for Internal Control in the Federal Government, GAO-14-704G (Washington, D.C.: September 2014)

Contact information: Carolyn L. Yocom, (202) 512-7114, yocomc@gao.gov

Veterans Health Care

Health disparities among the nation’s veteran population have been well documented during the pandemic and before. Although addressing these disparities has been a goal of the Department of Veterans Affairs’ Veterans Health Administration for almost a decade, the agency continues to lack performance measures to evaluate its efforts, which we previously recommended it develop and with which the Department of Veterans Affairs agreed.

Entity involved: The Veterans Health Administration within the Department of Veterans Affairs

Background

The Veterans Health Administration provides care to a diverse veteran population. The Department of Veterans Affairs’ (VA) Veterans Health Administration (VHA) operates the nation’s largest integrated health care system with 171 VA medical centers and 1,112 community-based outpatient clinics across the country. VHA provides health care nationwide to a diverse population of enrolled veterans, including women, Black, American Indian or Alaska Native, Asian, Native Hawaiian or Other Pacific Islander, and Hispanic or Latino people. According to fiscal year 2017 data, the latest available data, females comprised about 9 percent of the 18.3 million total veteran population. Additionally, Black, American Indian or Alaska Native, Asian, Native Hawaiian or Other Pacific Islander, and Hispanic or Latino veterans comprised about 23 percent of the total veteran population and 35 percent of the total female veteran population.[127]

As the veteran population becomes increasingly more diverse, VHA has recognized the importance of ensuring health equity. According to VHA, “health equity is the attainment of the highest level of health for all people, and achieving health equity requires valuing everyone equally with focused and ongoing societal efforts to address avoidable inequalities, historical and contemporary injustices and the elimination of health and health care inequities.” However, VHA has identified racial and ethnic disparities in its health care outcomes, mirroring trends seen across the U.S. in public and private health care systems.[128] For example:
  • In 2020, VHA reported sex-based disparities in some areas, such as immunization rates where women veterans older than 65 had a 10 percent lower pneumococcal immunization rate than men.[129]
  • In 2019, VHA reported evidence of disparities in health care outcomes within VA medical centers in the form of lower survival rates for Black veterans with cancer and cardiovascular-related illnesses compared with veterans from other racial and ethnic groups and White veterans.[130]
  • In 2021, VHA reported that from 2013-2018, female lesbian, gay, and bisexual veterans faced depressive and anxiety symptoms at double the rate of heterosexual female veterans.[131]
  • In 2011, VHA found outcomes for controlling blood pressure, blood glucose, and cholesterol levels were significantly worse for Black veterans than they were for White veterans.[132]

In 2012, VHA established its Office of Health Equity (OHE) to identify and address health care outcome disparities and to develop an action plan to help achieve health equity. OHE is responsible for several efforts, including providing education, training, research, communications and information; promoting common awareness about health care disparities and working to improve health care outcomes; and serving as a liaison to support other governmental and non-governmental organizations working to achieve health equity.

Overview of Key Issues

VHA data show health disparities among minority veterans for some but not all COVID-19 indicators, including health care services provided virtually during the pandemic. Although there are issues with the completeness of data on race and ethnicity, VHA has found that health disparities exist.[133] For example, interviews with VHA officials and a review of agency studies based on varying time frames throughout the pandemic, show that minority veterans, such as Blacks and Hispanic or Latinos, experienced health disparities among COVID-19 cases, hospitalizations, and death rates earlier in the pandemic, but there were improvements seen over time in cases and death rates.[134] According to VHA officials, COVID-19 pandemic conditions are constantly evolving and VHA observes the data regularly to identify any patterns of concern.

Testing. According to a 2020 study conducted by VHA researchers based on data from February through July 2020, Black veterans were more likely to be tested than Hispanic or Latino veterans and White veterans.[135] A VHA official said there were no observed differences in the levels of COVID-19 testing by sex.

Cases. According to a study completed by VHA researchers in 2021 based on 2020 data, after adjusting for age, sex, and prior diagnoses of COVID-risk factors, veteran groups such as Blacks, Hispanics or Latinos, and American Indian/Alaska Natives had higher odds of testing positive for COVID-19 when compared to White veterans, though those gaps had closed somewhat by the fall of 2020.[136] For example, the odds of Black veterans and Hispanic or Latino veterans testing positive for COVID-19 were 2.32 and 2.24 times higher, respectively, when compared to White veterans during the spring and summer of 2020. By the fall of 2020, rates had declined for all groups, with only American Indian/Alaska Native veterans having substantially higher odds (1.33) of testing positive for COVID-19 than White veterans, suggesting an improvement in this indicator for some minority veterans.[137]

Hospitalizations. VHA examined COVID-19 related hospitalizations among veterans seeking VHA health care in March through May 2020.[138] After adjusting for racial and ethnic differences in age and sex,
  • Black veterans were more likely to be hospitalized than White veterans (38 and 26 percent adjusted hospitalization rates, respectively);
  • Hispanic or Latino veterans were also more likely to be hospitalized than White veterans (34 and 26 percent adjusted hospitalization rates, respectively).[139]

Conversely, female veterans tended to fare better than their male counterparts. Based on an internal VHA analysis of hospitalization among COVID-19 positive veterans using VHA health care based on 2020 data, after adjusting for sex and differences in age and underlying comorbidities, male veterans had higher odds of hospitalization (about 22 percent) compared to female veterans (about 10 percent). Among COVID-19-positive female veterans, there were no disparities in hospitalization rates for Black veterans or for Hispanic or Latino veterans when compared to White veterans.

Deaths. According to a 2021 study by VHA researchers, after adjusting for age, sex, and prior diagnoses of COVID-risk factors, in the spring of 2020, Black veterans had a higher adjusted case fatality rate (12 percent) and other racial and ethnic veteran groups had similar case fatality rates (10–13 percent) when compared to White veterans (10.2 percent).[140] However, adjusted case fatality rates declined from spring to summer of 2020 and were lower for American Indian/Alaska Native veterans (10.7 percent), Asian veterans (10.5 percent) and Hispanic or Latino veterans (7.2 percent), although these groups still had greater case fatality than White veterans (5.7 percent).

The adjusted case fatality rate declined further for all groups from summer to fall of 2020 when compared to White veterans in the same time period. The overall spring-to-fall 2020 decline was greatest for Black veterans; in the fall, Black veterans had a lower adjusted case fatality rate (1.9 percent) compared to White veterans (2.5 percent), whereas other groups (2.4–3.3 percent) were similar to White veterans.

Female veterans experienced lower rates of mortality due to COVID-19 than male veterans. For example, based on an internal VHA analysis of mortality among COVID-19 positive veterans using VHA health care based on 2020 data, after adjusting for sex, differences in age and underlying comorbidities, compared to COVID-19 positive male veterans, female veterans had lower rates of mortality (about 7 and 1 percent, respectively).

Vaccinations received within VHA. Certain minority veterans aged 65 and older were more likely to receive COVID-19 vaccinations than their White counterparts.[141] Specifically, according to VHA, based on an internal analysis of veterans aged 65 or older who received COVID-19 vaccinations through VHA from December 2020 through February 2021, Black, Hispanic or Latino, and Asian veterans were 5, 19, and 39 percent more likely (respectively) than White veterans to have received a COVID-19 vaccination during that time frame.[142] The analysis also found that American Indian/Alaska Native veterans were 18 percent less likely than White veterans to have received a COVID-19 vaccination, but according to VHA, this finding was limited to American Indian/Alaska Native veterans who resided in areas where they could potentially access vaccinations from Indian Health Service facilities. According to VHA, as of September 1, 2021, female veterans were slightly more likely (about 3 percent) than male veterans to receive a COVID-19 vaccination.

Virtual health care. According to a study by VHA researchers, by June 2020, 58 percent of VHA health care was provided virtually (by phone only or video) compared to 14 percent prior to the pandemic.[143] Veteran patients with lower incomes, higher levels of service-connected disability, and more chronic conditions were more likely to receive virtual care during the pandemic.

VHA actions to address and prevent disparities. According to VHA officials and relevant agency documents, VHA has used research on the COVID-19 pandemic, as well as other pandemics to inform the various actions it has taken to address and prevent disparities during the COVID-19 pandemic among veterans from different racial and ethnic groups, including the following:[144]

VHA held a focus group to identify accessibility gaps related to the COVID-19 pandemic for veterans of various races and ethnicities.[145] The focus group provided suggestions for VHA such as,
  • instilling confidence in getting a COVID-19 vaccine by having veterans and leaders representing different racial and ethnic groups share their stories of receiving the COVID-19 vaccine;
  • ensuring information communicated by VHA was factual and dispelled COVID-19 misinformation;
  • addressing language barriers by translating communications; and
  • communicating information about VHA and non-VHA COVID-19 resources through diverse media outlets.[146]

VHA developed an equity dashboard. Through the dashboard, created in May 2020, VHA generated and shared weekly reports to the Veterans Integrated Service Networks (VISN), which manage and oversee VA medical facilities within a defined geographic area. These reports allowed VISN staff to track and map positive COVID-19 test rates by demographic category; identify new community case rates to help direct outreach efforts; and track veteran vaccination rates by sex, race, ethnicity, and rurality.

VHA developed and communicated COVID-19 information to veterans. According to VHA officials, VHA used a number of ways to provide veterans with information about COVID-19 such as texts, weekly newsletters, virtual events, blog posts, videos, podcasts, and through resources found on its website.

Through these means, VHA addressed topics including concerns about the safety of the COVID-19 vaccine, dispelled COVID-19 vaccine misinformation, and detailed how to access COVID-19 testing and services during the pandemic. For example, to provide information to women and Black veterans, who had concerns about receiving the COVID-19 vaccine, VHA posted blog entries written by Black VHA leaders and disseminated vaccine information though a podcast for women veterans.

VHA also translated many of its communications such as VHA webpages and brochures on COVID-19 vaccine information into Spanish to ensure information was accessible to Hispanic or Latino veterans and their families.

VHA developed a social risks screening tool to be used when veterans make appointments. In May 2020, VA medical center staff began using the tool. According to VHA, the screening tool may help identify the risks of catching COVID-19 that Black and Hispanic or Latino people may experience disproportionately; for example, research shows Black and Hispanic or Latino Americans are more likely to hold jobs that are not amenable to social distancing that would put them at a higher risk for contracting the COVID-19 virus.

To prioritize individuals for COVID-19 testing, screening questions on the tool inquire about a veteran’s social risks, such as use of public transportation and living in overcrowded housing, which veterans from some racial and ethnic groups may more likely experience. The screener tool also asks questions on topics such as shopping during the pandemic, COVID-19 prevention strategies, and social interactions. These questions may also be used separately to assess an individual’s need for counselling or assistance to minimize COVID-19 exposure.

VHA developed resources for veterans with chronic medical conditions. In March 2021, VHA provided educational material and information on how to access services during the pandemic through brochures posted to its website. For example, a brochure for veterans exposed to airborne hazards and open burn pits during deployment, who are at higher risk for conditions like cancer, chronic kidney disease, and chronic obstructive pulmonary disease, provides information on how to refill prescriptions online and resources for setting up virtual health care appointments.[147]

VHA is expanding virtual care. To better target the expansion of virtual care to veterans from different racial and ethnic groups, VHA officials told us that they held four focus groups and one follow-up interview in June through August of 2021. These focus groups included women veterans, Black veterans, disabled veterans, and LGBT veterans. According to VHA, the focus groups were a way for VHA to learn more about some of the barriers and assistance veterans experienced in seeking or engaging in virtual care and to better understand priorities regarding virtual health care services. VHA officials also told us that they are working with the Navajo Health Foundation to complete a Memorandum of Agreement that will allow American Indian veterans to access VHA virtual care services from Sage Memorial Hospital.[148]

According to VHA officials, VHA has funded evaluation projects in fiscal years 2020 and 2021 that address health equity issues related to virtual care and expect results from these evaluations in fiscal year 2022. These studies broadly examine telehealth use by VHA during the pandemic and range from assessing health disparities in telehealth use, broadband access and telehealth utilization, quality of care, and access to resources bridging the digital divide.

VHA continues to lack performance measures to evaluate its actions to address health disparities, including for the COVID-19 response. OHE lacks performance measures to assess the effectiveness of its various COVID-19 response efforts to address and prevent health disparities among veterans from different racial and ethnic groups. OHE officials told us that they measure the effectiveness of their actions by tracking and analyzing data on a variety of key indicators during the COVID-19 pandemic, such as cases and vaccination rates. VHA officials noted that OHE uses data on key indicators as a way to assess the effectiveness of its various COVID-19 response efforts to address and prevent health disparities among veterans from different racial and ethnic groups. According to OHE, when staff observe changes in the data indicating that disparities are decreasing, this indicates that their actions are working.

Specific and measurable performance indicators for agency actions could help the office more accurately determine if any changes in data related to health disparities can be attributed to agency actions or other external influences. For the COVID-19 pandemic, changes in disparities data during the pandemic could be due to VA efforts or could also be due to factors, such as national, state, local, or other non-VHA response efforts. VHA officials told us that unlike national COVID-19 vaccination rates, within VHA, Black and Hispanic or Latino veterans are vaccinated at higher rates than White veterans. However, as previously noted, Black and Hispanic or Latino veterans, experienced health disparities among COVID-19 cases, hospitalizations, and death rates, and those disparities are also generally observed in the national population.

Our prior work on effectively managing performance shows that performance measures should assess how well the organization is meeting its goals and should be linked directly to offices that have responsibility for the program or activity. For example, as part of its goal to promote better health outcomes for racial and ethnic populations, VHA’s OHE is responsible for spreading the use of its COVID-19 equity dashboard among VHA’s 18 VISNs. However, OHE has no way of measuring how effective this effort has been in promoting better health outcomes for racial and ethnic populations.[149]

Additionally, OHE’s communication plan to promote awareness about health disparities states that it should regularly update OHE website with new information briefs, newsletters, Cyberseminar announcements, and other relevant publications and updates. While OHE has made COVID-19 specific updates to its website and has communicated information on COVID-19 though newsletters and other media outlets, it has no way of determining how successful these actions have been in raising awareness about health disparities during the pandemic.

In December 2019, we found that OHE’s Health Equity Action Plan—VHA’s action plan to address health equity across the agency—lacked performance measures to assess progress and we recommended that its action plan include such measures. VHA concurred with our recommendation and told us they plan to add performance measures to its Health Equity Action Plan. However, as of the date of this report, the recommendation remains unimplemented. It is important that VHA implement performance measures concerning its actions to address and prevent health dipartites among veterans. Until VHA implements these performance measures, VHA runs the risk of not knowing the effectiveness of its efforts for the COVID-19 pandemic or pandemics or public health emergencies that may occur in the future.

Methodology

To conduct this work, we reviewed VHA studies published in peer-reviewed journals and other internal analyses identified by VHA that examined the presence of disparities in COVID-19 indicators among veterans from different racial and ethnic groups.[150] We also reviewed VHA guidance and documents used to address and respond to health disparities among veterans. In addition, we interviewed and reviewed written responses from officials in VHA’s OHE and its Office of Women’s Health about identified disparities in COVID-19 indictors among veterans from different racial and ethnic groups, actions to address these disparities, and ways VHA is measuring the effectiveness of its actions.

Agency Comments

We provided VA and the Office of Management and Budget with a draft of this enclosure. VA concurred with our findings and provided technical comments, which we incorporated as appropriate. The Office of Management and Budget did not provide comments on this enclosure.

GAO’s Ongoing Work

We will continue to monitor racial and ethnic health disparities during the COVID-19 pandemic, including as they relate to the provision of equitable access to health care.

Related GAO Products

VA Health Care: Better Data Needed to Assess the Health Outcomes of Lesbian, Gay, Bisexual, and Transgender Veterans, GAO-21-69 (Washington, D.C.: October 19, 2020).

VA Health Care: Opportunities Exist for VA to Better Identify and Address Racial and Ethnic Disparities, GAO-20-83 (Washington, D.C.: December 11, 2019).

VA Health Care: Improved Monitoring Needed for Effective Oversight of Care for Women Veterans, GAO-17-52 (Washington, D.C.: December 2, 2016).

Contact information: Sharon M. Silas, (202) 512-7114, silass@gao.gov; Alyssa M. Hundrup, hundrupa@gao.gov, (202) 512-7114

HHS Cybersecurity

The U.S. National Institutes of Health has not consistently implemented security controls in its information security program or selected information technology systems that receive, process, and maintain sensitive information, putting confidentiality, integrity, and availability of information at risk. GAO has made numerous recommendations to Department of Health and Human Services component agencies to improve information security. Those component agencies have implemented, or are in the process of implementing, the recommendations.

Entity involved: U.S. National Institutes of Health, within the Department of Health and Human Services

Background

The U.S. National Institutes of Health’s (NIH) responsibilities include conducting research on the prevention of infectious diseases (such as COVID-19), administering over $30 billion annually in medical research grants, and supporting research on pathogens, including those that have the potential to pose a severe threat to public health and safety. In carrying out its mission, NIH relies extensively on information technology systems to receive, process, and maintain sensitive data. Accordingly, effective information security controls are essential to ensure the confidentiality, integrity, and availability of the information on the agency’s systems.

Overview of Key Issues

During the course of a prior audit we conducted from January 2019 to June 2021, we found that NIH implemented numerous security controls within its information security program and over the 11 systems we reviewed across four NIH entities. These controls included, among other things, taking steps to develop security plans, ensuring that the majority of personnel had basic security awareness training, and developing remedial action plans for correcting deficiencies.

However, the agency had not always effectively implemented other controls—both within its information security program and for the selected systems—to protect the confidentiality, integrity, and availability of these systems and the information maintained on them. Deficiencies existed in some of the controls intended to identify risks, protect systems from threats and vulnerabilities, detect and respond to cybersecurity events, and recover system operations in cases of system disruptions. As a result, NIH was at increased risk that sensitive research and health-related information could be disclosed or disrupted.

In June 2021, we issued a report with limited distribution because of the sensitive information it contained. In that report, we made 219 recommendations to NIH, including:
  • 66 to improve NIH’s information security program by, among other things, assessing risks, as needed; documenting complete and accurate security controls; assessing controls more comprehensively; and remediating deficiencies in a timely manner; and
  • 153 to resolve system control deficiencies by implementing stronger access controls, encrypting sensitive data, configuring devices securely, applying patches in a timely manner, strengthening firewall rules, improving incident response, and implementing monitoring controls more effectively, among other things.

NIH concurred with the recommendations to improve its information security program. Additionally, NIH agreed to implement 148 of the 153 recommendations to resolve system control deficiencies, and disagreed with the remaining five recommendations for various reasons. However, we believe these five recommendations are warranted in order to further improve the security over NIH’s systems. The table below shows the number of deficiencies and recommendations for NIH’s information security program and system control deficiencies across the core security functions of identify, protect, detect, respond, and recover.
Number of GAO-Identified Information Security Program and System Control Deficiencies at the U.S. National Institutes of Health and Associated Recommendations by Core Security Function

Core security function

Number of information security program deficiencies

Number of information security program recommendations

Number of selected system control deficiencies

Number of selected system control deficiency recommendations

Identify

12

26

0

0

Protect

4

6

78

141

Detect

5

11

5

11

Respond

7

16

1

1

Recover

4

7

0

0

Total

32

66

84

153
Source: GAO. | GAO-22-105051

In commenting on our June 2021 report, NIH stated that it had taken corrective actions to address many of the deficiencies identified. We plan to issue a public report that provides the results of our determination of the status of the agency’s corrective actions in addressing our recommendations later in 2021 or early in 2022. Until these recommendations are addressed, NIH’s systems, and the information maintained in those systems, are at increased risk of unauthorized access.

Methodology

To conduct this work, we selected four entities for review from the agency’s 28 institutes, centers, and the director’s office. Our selection focused on entities that provide information technology and security for the agency and are essential to NIH’s mission. From the four entities, we selected 11 systems for review that, for example, (1) collect, process, and maintain private or potentially sensitive proprietary business, medical, and personally identifiable information; (2) are essential to NIH’s mission; (3) could have a catastrophic or severe impact on operations if compromised; and/or (4) share some common infrastructure.

To assess NIH’s information security program, we examined security policies, procedures, and other documents; compared selected systems’ risk assessments, security plans, security control assessments, remedial action plans, and contingency plans to federal guidance; and interviewed personnel at NIH entities. To assess controls over the 11 selected systems, we reviewed the agency’s network infrastructure and assessed the extent to which controls associated with system access, encryption, configuration management, and monitoring met federal guidance and industry best practices.

Agency Comments

We provided NIH, the Department of Health and Human Services, and the Office of Management and Budget with a draft of this enclosure. NIH provided technical comments, which we incorporated as appropriate. The Office of Management and Budget did not provide comments on this enclosure.

GAO’s Ongoing Work

We plan to issue a public report that describes the findings discussed in our June 2021 report, with references to sensitive information removed. In addition, we will report on the status of NIH’s actions to implement our recommendations related to improving its security program and resolving system control deficiencies.

GAO’s Prior Recommendations

The table below presents our recommendation on cybersecurity from the September 2020 CARES Act report.
Prior GAO Recommendation Related to Cybersecurity

Recommendation

Status

To ensure Health and Human Services (HHS) component agencies involved in supporting the critical health care infrastructure and systems responding to COVID-19 are protected from cybersecurity threats, we recommended that HHS expedite the implementation of our prior recommendations to address cybersecurity weaknesses at its component agencies. (September 2020)

Open-partially addressed. HHS concurred with this recommendation. The Food and Drug Administration, Centers for Medicare and Medicaid Services, and Centers for Disease Control and Prevention have implemented an additional 71 cybersecurity recommendations since the September 2020 CARES Act report. This brings the total number of implemented cybersecurity recommendations to 421 (of 434) from September 2020 through July 2021—a 16 percent increase in the number of corrective actions taken to bolster cybersecurity at these agencies.
Source: GAO. I GAO-22-105051

Contact information: Jennifer R. Franks, (404) 679-1831, franksj@gao.gov

Worker Safety and Health

The Occupational Safety and Health Administration should conduct an analysis of the challenges it has faced to ensuring worker safety during the pandemic to improve its response to this pandemic and prepare for a future one.

Entity involved: Occupational Safety and Health Administration, within the Department of Labor

Recommendation for Executive Action

The Assistant Secretary of Labor for Occupational Safety and Health should assess—as soon as feasible and, as appropriate, periodically thereafter—various challenges related to resources and to communication and guidance that the Occupational Safety and Health Administration has faced in its response to the COVID-19 pandemic and should take related actions as warranted.

The Department of Labor partially agreed with our recommendation. The Department of Labor stated that it agrees that it is important to assess lessons learned and best practices for the Occupational Safety and Health Administration’s operational response to COVID-19. However, Department of Labor officials said they believe that while the pandemic is ongoing, the agency’s resources are best used to help employers and workers mitigate exposures to COVID-19. Because it is unclear when the COVID-19 pandemic will end, we maintain that assessing—as soon as feasible—the challenges that the Occupational Safety and Health Administration faced in responding to the pandemic, and taking related actions, would enable the agency to improve its enforcement efforts during this pandemic and help it prepare for operations during any future pandemic.

Background

The Department of Labor’s (DOL) Occupational Safety and Health Administration (OSHA) helps ensure safe and healthful conditions for workers by setting mandatory workplace safety and health standards; conducting inspections; investigating complaints and reports of injuries, illnesses, and fatalities at workplaces; and offering training, guidance, and outreach; among other efforts.[151]

OSHA has 10 regional offices and 89 area offices that implement and oversee enforcement in the field.[152] OSHA is responsible for setting and enforcing workplace safety and health standards for the private sector in 29 states, the District of Columbia, and four territories.[153] Twenty-one states and Puerto Rico set and enforce their own workplace safety and health standards for private sector and state and local government employers under state plans approved by OSHA.[154]

OSHA has almost 1,900 employees, and its appropriation for fiscal year 2021 was approximately $592 million. OSHA received $105.8 million in additional funding under the CARES Act and the American Rescue Plan Act of 2021.[155]

Overview of Key Issues

OSHA conducted enforcement using existing worker safety standards during the pandemic. During the first 15 months of the pandemic, OSHA primarily relied on existing standards and voluntary employer guidance to conduct its enforcement. In March 2021, OSHA started a COVID-19 National Emphasis Program (NEP) to target its inspections on both health-care and non-health-care industries with high risk of worker exposure to COVID-19. In June 2021, OSHA issued an emergency temporary standard (ETS) related to COVID-19 exposure for the health-care industry. See figure for a summary of key OSHA actions during the COVID-19 pandemic.

Timeline of OSHA’s Key Actions to Respond to the COVID-19 Pandemic, from January 2020 through September 2021

aOSHA published updated versions of its Interim Enforcement Response Plan for COVID-19 on May 19, 2020, March 12, 2021, and July 7, 2021.
bOSHA published updates to this employer guidance on June 10, 2021 and August 13, 2021.
cOSHA published an update to its COVID-19 National Emphasis Program on July 7, 2021.

OSHA has recorded data related to COVID-19 in the workplace since February 2020. From February 2020 through August 2021, related to COVID-19, OSHA received 16,667 complaints and referrals, 1,678 employer reports of severe injuries or illnesses, 1,225 reports of fatalities, and 3 reports of catastrophes.[156] During the same time period, OSHA conducted 16,820 informal inquiries, 1,621 on-site inspections, and 1,190 remote inspections related to COVID-19.[157] As a result of these inspections, OSHA cited 917 violations and issued about $6.4 million in penalties.[158] (See table.)

COVID-19-Related Reports to OSHA and OSHA Enforcement Actions, March 2020 through August 2021

March-May 2020

June-August 2020

September-November 2020

December 2020-February 2021

March-May 2021a

June-August 2021a

Totala

Reports to OSHA

Complaints

4,843

3,757

2,579

2,708

1,213

750

15,850

Referrals

148

134

77

348

59

37

803

Employer reports of severe injury or illnessb

507

387

222

273

66

223

1,678

Reports of fatalitiesb

369

325

117

237

82

95

1,225

Reports of catastrophesb

2

0

0

1

0

0

3

OSHA enforcement actions

On-site inspections

114

219

150

210

500

427

1,620

Remote inspections

338

369

139

264

61

19

1,190

Violations citedc

225

272

105

210

95

10

917

Penalties ($ thousands)c

1,616

1,740

731

1,634

634

41

6,396
Source: GAO analysis of Occupational Safety and Health Administration (OSHA) Information System data. | GAO-22-105051

Notes: Complaints refer to reports notifying OSHA of alleged workplace safety or health hazards. Complaints can be made by employees, their representatives, or others.

Referrals and employer reports: OSHA uses the term “referrals” to encompass two different report types, (1) reports of work-related severe injuries and illnesses, which employers are required to submit to OSHA (which OSHA calls employer-reported referrals); and (2) reports of potential workplace hazards from selected other entities, such as local government agencies or media outlets. In this report, we use “referrals” to describe those reports from selected non-employer sources, and “employer reports” to describe those reports from employers. Employers are required to report all work-related in-patient hospitalizations, amputations, and losses of an eye within 24 hours. 29 C.F.R. § 1904.39(a)(2).

Fatalities: Employers are required to report the work-related death of an employee to OSHA within 8 hours. 29 C.F.R. § 1904.39(a)(1). According to OSHA officials, most reports of fatalities come from employers. However, officials noted that they do receive reports of fatalities from other sources, such as the media or emergency medical personnel. In this report we refer to all reported fatalities as “reports of fatalities.”

Catastrophes: OSHA’s Field Operations Manual defines a catastrophe as the hospitalization of three or more employees resulting from a work-related incident or exposure.

During the COVID-19 pandemic, OSHA’s pandemic-related enforcement policies have allowed area offices to conduct some inspections remotely, instead of being physically at the workplace. According to OSHA policy, data on remote inspections include only those inspections that were conducted completely off-site. Data in this table include enforcement activity performed by OSHA only, and not by state agencies that operate under OSHA-approved state plans.

aSince OSHA has 6 months from the occurrence of a violation to issue a citation and any related penalties, totals for the number of violations cited and penalties issued from March 2021 through August 2021 may not reflect the total that will eventually be cited or issued related to inspections initiated during those months. These data are current as of September 7, 2021.
bData reliability issues regarding COVID-19-related employer reports, specifically reports of hospitalizations, were discussed in an enclosure to our January 2021 CARES Act report and are summarized elsewhere in the current enclosure.
cSome of these cases are still open and may have been contested or appealed by the employers, which could ultimately result in changes to the violations cited or penalties issued.

From February 2020 through May 2021, without COVID-19-specific standards in place, OSHA enforced existing applicable standards, such as those related to respiratory protection, and issued general and industry-specific voluntary guidance for employers on COVID-19-related precautions.[159] OSHA also occasionally used the “general duty clause” for enforcement. According to OSHA’s Field Operations Manual, if hazards not covered by an OSHA standard are discovered during an inspection, a general duty clause violation may be cited, if certain criteria are met.[160] From February 2020 through August 2021, OSHA cited 20 COVID-19-related general duty clause violations (see table).
COVID-19-Related Violations and Penalties, for Most Frequently Cited Standards and the General Duty Clause, from February 2020 through August 2021
General duty clausea

Respiratory protectionb

Internal employer recordkeeping for fatalities, injuries, and illnessesc

Reporting to OSHA fatalities and severe injuries and illnessesd

Personal protective equipmente

Provision of requested records to government representativesf

Hazard communicationg

Violations citedh

20

576

128

101

30

15

15

Penalties
($ thousands)h

471

4,900

214

681

70

16

9
Source: Occupational Safety and Health Administration (OSHA) Information System data. | GAO-22-105051

aThe general duty clause requires employers to provide a workplace free from recognized hazards that are causing or are likely to cause death or serious physical harm to their employees. The general duty clause is a part of the Occupational Safety and Health Act of 1970, as amended, and is distinct from standards, which OSHA promulgates under the OSH Act. The general duty clause is used when no standard applies to a particular hazard. See 29 U.S.C. § 654(a)(1).
b29 C.F.R. § 1910.134 generally requires employers to provide respiratory protection to employees when necessary to protect employee health.
c29 C.F.R. § 1904.4 generally requires employers to keep an internal record of all work-related fatalities, injuries, and illnesses.
d29 C.F.R. § 1904.39 generally requires employers to report to OSHA all work-related in-patient hospitalizations, amputations, and losses of an eye within 24 hours, and all work-related fatalities within 8 hours.
e29 C.F.R. § 1910.132 generally requires employers to provide personal protective equipment to employees when necessary, such as for eyes, face, and head.
f29 C.F.R. § 1904.40 generally requires employers to provide records to government representatives within 4 business hours of a request.
g29 C.F.R. § 1910.1200 generally requires employers to provide employees information concerning chemical hazards.
hSome of these cases are still open and may have been contested or appealed by the employers, which could ultimately result in changes to the violations cited or penalties issued. Since OSHA has 6 months from the occurrence of a violation to issue a citation and any related penalties, totals for the number of violations cited and penalties issued may not reflect the total that will eventually be cited or issued. These data are current as of September 7, 2021.

OSHA inspectors faced some challenges applying OSHA requirements to COVID-19 cases. OSHA standards existing prior to OSHA’s June 2021 emergency temporary standard (ETS) for certain health-care employers do not contain provisions specifically targeted at the COVID-19 hazard. As a result, it has been difficult for employers and employees to determine what particular COVID-19 safety measures are required, or how existing standards are expected to work when applied to COVID-19. Moreover, according to the preamble to OSHA’s health-care ETS, OSHA’s efforts to enforce existing standards to address the COVID-19 hazard have been hindered by the absence of any specific requirements in these standards related to some of the most important COVID-19-mitigation measures. OSHA inspectors or managers from three of five area offices we spoke with said that it was difficult to apply existing OSHA standards to COVID-19 cases, for example, because existing standards did not cover certain COVID-19 hazard mitigations, such as wearing a face covering.

In addition, although not unique to COVID-19 inspections, violations of the general duty clause were challenging to cite since such violations require a large amount of documentation to demonstrate that all four elements required to use the clause are present.[161] According to the preamble to OSHA’s health-care ETS, the general duty clause does not provide employers with specific requirements to follow or a road map for implementing appropriate COVID-19 abatement measures. In addition, OSHA’s burden of proof to establish a general duty clause violation is heavier than a standard violation.

Inspectors from one area office told us that they did not have enough knowledge to determine what should be considered a dangerous level of COVID-19 exposure or risk in order to cite a related violation. Inspectors or managers from four of five area offices we spoke with said it was difficult to apply the general duty clause to COVID-19-related hazards, for example, because it would likely only be cited if an employer was making no effort to use any COVID-19 mitigation strategies.

According to the preamble to OSHA’s health-care ETS, in many cases during the pandemic, inspectors found that employers were following some minimal COVID-19 mitigation strategy, while ignoring other crucial components of employee protection.[162] The preamble further notes that, in such instances, because the employer had taken some steps to protect workers, successfully proving a general duty clause citation would have required OSHA to show that additional missing measures would have further materially reduced the COVID-19 hazard.

OSHA’s COVID-19 National Emphasis Program (NEP) is focused on high-risk industries and uses data that are incomplete. In March 2021, OSHA initiated a 1-year COVID-19 NEP that aims to ensure that employees in high-risk industries are protected from the hazard of COVID-19.[163] The NEP includes a specific focus to ensure that workers are protected from retaliation.[164]

Prior to the NEP, all COVID-19-related inspections were unprogrammed—conducted in response to incoming reports of hazardous working conditions at a specific workplace. In addition to continuing unprogrammed inspections, the NEP includes plans for OSHA to conduct programmed COVID-19 inspections—not in response to any specific report of a hazard—at workplaces where workers have higher risks of exposure to COVID-19. From February through August 2021, OSHA has performed a total of 960 COVID-19 NEP inspections, including 366 programmed and 594 unprogrammed.[165]

To implement the NEP, OSHA created two targeting lists of establishments within the local jurisdiction of each area office from which to select for programmed inspections—the first based solely on industries with a higher risk of exposure to COVID-19 and the second based on those higher-risk industries plus establishment-specific respiratory and other illness rates in 2020.

The first NEP targeting list includes establishments in industries where OSHA conducted the highest number of COVID-19-related enforcement activities from February 2020 through mid-June 2021. This list aims to identify where the highest number of workers are expected to perform tasks associated with exposure to COVID-19.[166] This includes establishments in health-care industries, such as hospitals and assisted living facilities, and non-health-care industries, such as poultry processing and grocery stores.[167]

The second NEP targeting list includes establishments with higher-than-average per capita respiratory and other illness rates, based on employer-reported Form 300A summary injury and illness data (or “300A data”).[168] However, as we found in a January 2021 report on summary injury and illness data reporting, these 300A data are incomplete and thus may be of limited effectiveness in developing targeting lists that identify workplaces most in need of COVID-19 inspections. Specifically, we estimated that employers did not submit 300A data for more than half of required establishments for calendar years 2016 through 2018. Further, not all employers with the potential for worker exposure to COVID-19 are required to submit 300A data.[169]

OSHA officials acknowledged that some establishments included in the first targeting list are not required to report 300A data, and thus will not show up in the second targeting list. According to the NEP Directive, area offices may add establishments to the NEP targeting lists, based on their local knowledge, among other things, so they are not limited to establishments selected based on incomplete data. However, because more than half of required establishments may not be reporting 300A data, OSHA’s second targeting list may be missing many establishments with higher rates of respiratory and other illness.[170]

As we found in our January 2021 report, because OSHA is less likely to conduct certain inspections on employers who do not report 300A data, employers have an incentive to avoid reporting these data.[171] Such employers that avoid reporting 300A data may still merit a COVID-19 NEP inspection. In our January 2021 report on summary injury and illness data reporting, we recommended that OSHA evaluate the agency’s procedures for ensuring that employers report their 300A data and make needed changes, and the agency generally agreed with our recommendation. As of September 2021, DOL had not addressed this recommendation.[172] By implementing this recommendation, OSHA could base its targeting on more complete workplace illness data—potentially including twice as many establishments—and thus, better target its COVID-19 NEP inspections.

OSHA issued a COVID-19 emergency temporary standard (ETS) for the health-care industry; a separate infectious disease standard and a vaccination ETS are in process. In June 2021, OSHA issued a COVID-19 ETS for certain health-care employers that treat suspected or confirmed COVID-19 patients, such as hospitals and long-term care facilities.[173] The health-care ETS may be in effect for up to 6 months after publication and may be superseded by a permanent standard. This ETS does not cover employers in other industries, some of which OSHA has identified as at high risk of COVID-19 exposure in its other policies.[174] The health-care ETS requires covered employers to comply with several provisions to protect workers from COVID-19 hazards, including
  • developing and implementing a COVID-19 plan and related policies and procedures, and providing related training;
  • screening and managing patients and visitors, including contractors, for COVID-19;
  • implementing various COVID-19 mitigation measures, such as use of personal protective equipment for employees, physical distancing, physical barriers, cleaning and disinfection, and ventilation;
  • providing time and paid leave for COVID-19 vaccination;
  • ensuring anti-retaliation principles are upheld related to employee rights under the ETS;
  • screening and managing employees for COVID-19, including, for example, daily screening and requiring employees to notify the employer of COVID-19 positive tests and symptoms;
  • keeping a log of all employee COVID-19 cases, regardless of whether they are work-related; and,
  • reporting work-related COVID-19 fatalities and hospitalizations to OSHA, regardless of the amount of time between the exposure to COVID-19 and the fatality or hospitalization.

The health-care ETS allows OSHA to obtain some worker safety data related to COVID-19 from covered health-care employers—which they would not otherwise be required to provide. Specifically, an enclosure to our January 2021 CARES Act report stated that OSHA did not receive employer reports of all work-related hospitalizations related to COVID-19 because disease symptoms do not appear within 24 hours, the required reporting time frame for work-related hospitalizations.[175] We recommended that OSHA determine what additional data may be needed from employers or other sources.

The new reporting requirement in the health-care ETS addresses this challenge for covered health-care employers by requiring them to report to OSHA all work-related COVID-19 fatalities and hospitalizations, regardless of the amount of time between worker exposure to COVID-19 and the death or hospitalization, and takes into consideration our prior recommendation. Thus, we are closing this recommendation. OSHA is not requiring COVID-19-related hospitalization or fatality reports under the adjusted time frames for workplaces where the health-care ETS does not apply.

The health-care ETS also adjusts the existing recordkeeping requirement, to require covered health-care employers to keep an internal log of all COVID-19 cases among their employees, regardless of whether they are determined to be work-related.[176] When conducting inspections, OSHA officials should be able to obtain these logs to better assess workers’ COVID-19 exposure and risk, and identify any COVID-19-related violations.

Although the health-care ETS covers only employers in the health-care industry, in its other policies, OSHA has acknowledged the widespread impact of COVID-19 on industries beyond health care. In its March and July 2021 updates to its pandemic-related enforcement policy, OSHA expanded its higher risk designation for COVID-19 exposure from applying only to health-care settings to applying to any workplace that can be crowded or involve a high level of interaction with people, providing poultry processing and correctional facilities, two non-health-care industries, as examples of higher-risk workplaces. Also, as previously discussed, OSHA’s COVID-19 NEP is designed to focus on industries where the agency has determined that workers face increased potential for exposure to COVID-19, and targets both health-care and non-health-care industries (see fig.).

COVID-19-Related Reports to OSHA among Industries Targeted by OSHA’s National Emphasis Program, February 2020 through August 2021

Notes: Reports to OSHA include the total number of complaints, referrals, employer reports of severe injury or illness, and reports of fatalities or catastrophes.
Complaints refer to reports notifying OSHA of alleged workplace safety or health hazards. Complaints can be made by employees, their representatives, or others.
Referrals and employer reports: OSHA uses the term “referrals” to encompass two different report types, (1) reports of work-related severe injuries and illnesses, which employers are required to submit to OSHA (which OSHA calls employer-reported referrals); and (2) reports of potential workplace hazards from selected other entities, such as local government agencies or media outlets. In this report, we use “referrals” to describe those reports from selected non-employer sources, and “employer reports” to describe those reports from employers. Employers are required to report all work-related in-patient hospitalizations, amputations, and losses of an eye within 24 hours. 29 C.F.R. § 1904.39.
Fatalities: Employers are required to report the work-related death of an employee to OSHA within 8 hours. 29 C.F.R. § 1904.39. According to OSHA officials, most reports of fatalities come from employers. However, officials noted that they do receive reports of fatalities from other sources, such as the media or emergency medical personnel. In this report we refer to all reported fatalities as “reports of fatalities.”
Catastrophes: OSHA’s Field Operations Manual defines a catastrophe as the hospitalization of three or more employees resulting from a work-related incident or exposure.

OSHA is engaged in rulemaking for the health-care ETS and a separate infectious disease standard, and is developing a vaccination ETS. An ETS may serve as a proposal for a permanent standard, and OSHA must generally take final action on the proposal within 6 months of publication, in the case of the health-care ETS, by December 2021.[177] In September 2021, OSHA officials said they were reviewing the comments they received on the health-care ETS during the public comment period, which ended on August 20, 2021. They further noted that they were reviewing the ongoing need for this ETS every 30 days and had not yet determined whether to extend this ETS beyond 6 months. Officials said they would continue to monitor trends in COVID-19 infections and deaths and would update the health-care ETS, as appropriate, if and when “new information indicates a change in measures necessary to address the grave danger [from the virus].” On June 24, 2021, the AFL-CIO and United Food and Commercial Workers unions petitioned the U.S. Court of Appeals for the D.C. Circuit to review OSHA’s decision not to issue an ETS applicable to employees outside the health-care industry who face occupational exposure to COVID-19, including but not limited to employees in the meatpacking and food processing industries.[178]

OSHA is also working on separate rulemaking for an infectious disease standard to protect workers in high-risk environments from long-standing and emerging infectious diseases, with a notice of proposed rulemaking currently projected to be published in December 2021. According to the White House Office of Information and Regulatory Affairs’ Spring 2021 regulatory agenda, the rulemaking considers targeting health-care workers and others who are exposed in high-risk environments, potentially covering workplaces such as hospitals, correctional facilities, some laboratories, and other occupational settings where workers can be at increased risk of exposure to infectious people.

On September 9, 2021, the White House announced a plan to increase COVID-19 vaccination. Specifically, OSHA is to develop an ETS that would require all employers with 100 or more employees to implement COVID-19 vaccination and testing requirements for employees and to provide vaccine-related paid time off. In September 2021, OSHA officials said the agency was working expeditiously to develop the vaccination ETS; officials did not provide an estimate for when it would be finalized.

OSHA’s updated COVID-19 enforcement policy separates health-care and non-health-care industries and reduces the use of some adapted methods used during the pandemic. In June 2021, soon after issuing the health-care ETS, OSHA published an ETS enforcement policy for inspectors designed to ensure uniform enforcement among ETS-covered health-care employers. For key requirements in the health-care ETS, the ETS enforcement policy provides detailed inspection guidance for what to include in an inspection, for example, determining whether the employer has a designated eating and drinking area with sufficient space to accommodate physical distancing. It also provides citation guidance for key requirements in the health-care ETS, such as specific examples for when a violation may be cited, as well as guidance for inspector safety, among other things.

In July 2021, OSHA released its updated pandemic-related enforcement policy, which generally covers non-health-care employers (as health-care employers are covered under the ETS enforcement policy).[179] The updated pandemic-related enforcement policy for non-health-care employers
  • focuses enforcement on protections for workers who are unvaccinated or not yet fully vaccinated;
  • revises its assessment of workplace risk, as discussed above, to include in its higher risk category any workplace that can be crowded or involve a high level of interaction with people; and
  • provides updated guidance to protect OSHA inspectors.

Reflecting a progression toward a return to normal enforcement operations, the July 2021 policy continues to allow use of two of OSHA’s COVID-19-adapted enforcement methods that we described in our January 2021 enclosure—(1) remote inspections and (2) informal inquiries in place of inspections—but generally removes citation discretion.[180] The updated pandemic-related enforcement policy states that OSHA will perform on-site COVID-19 inspections, instead of remote inspections, in most cases.[181] According to the policy, citation discretion was intended to be time limited, applied on a case-by-case basis, and related to supply shortages, such as shortages in N95 masks. OSHA is generally ending use of citation discretion in this context based on updated Centers for Disease Control and Prevention and Food and Drug Administration guidance regarding supply availability, according to the policy.

Inspectors or managers from all five area offices we spoke with told us that the use of these adapted enforcement methods during the pandemic varied by factors such as industry, risk of worksite COVID-19 exposure, and severity of reported incidents. For example, according to inspectors at one area office, inspectors for the construction industry transitioned from remote inspections back to onsite inspections earlier than for other industries due to the nature of construction work and the lower risk of COVID-19 at construction sites. According to OSHA guidance, some construction work tasks are classified as low risk activities, as they may be outdoors and may allow for social distancing.

Data from the OSHA Information System (OIS), which the agency uses to track its enforcement activities, indicate that over the course of the pandemic, some COVID-19-adapted enforcement methods have generally declined. In addition, OIS data show that OSHA enforcement activities shifted substantially from inspections to informal inquiries at the start of the pandemic, and that then the proportion of informal inquiries generally declined through August 2021 (see fig.).[182]

OSHA Enforcement Activities Based on Report Type, for Selected Periods from March 2019 through August 2021

Notes: Complaints refer to reports notifying OSHA of alleged workplace safety or health hazards. Complaints can be made by employees, their representatives, or others.
Referrals and employer reports: OSHA uses the term “referrals” to encompass two different report types, (1) reports of work-related severe injuries and illnesses, which employers are required to submit to OSHA (which OSHA calls employer-reported referrals); and (2) reports of potential workplace hazards from selected other entities, such as local government agencies or media outlets. In this report, we use “referrals” to describe those reports from selected non-employer sources, and “employer reports” to describe those reports from employers. Employers are required to report all work-related in-patient hospitalizations, amputations, and losses of an eye within 24 hours. 29 C.F.R. § 1904.39.
An informal inquiry is a process conducted in response to a complaint, referral, or employer report of severe injury or illness that does not meet OSHA’s criteria for conducting an inspection. According to OSHA officials, informal inquiries conducted in response to an employer-reported severe injury or illness are called rapid response investigations, and informal inquiries conducted in response to complaints from employees or referrals from entities other than employers are called phone/fax investigations.
According to OSHA’s Field Operations Manual, if Area Directors consider employers’ responses to these informal inquiries to be inadequate, they may decide to initiate a related inspection.
aCOVID-19-related enforcement activities are a subset of all enforcement activities from March 2020 through August 2021. The related bars represent the percentages of all COVID-19-related enforcement activities that were informal inquiries or inspections.

Area offices faced enforcement challenges during the COVID-19 pandemic, but OSHA has not assessed lessons learned or promising practices. Officials we interviewed in OSHA area offices reported facing operational challenges in enforcement throughout the COVID-19 pandemic. However, OSHA has not yet assessed these challenges to improve its response during the current pandemic and prepare for any future pandemic.[183] In particular, area office inspectors and managers identified challenges related to resources and to communication and guidance.

Resource challenge: staffing and volume of incoming reports. Inspectors from all five area offices we spoke with described challenges with processing a large volume of complaints and other reports of workplace hazards at the beginning of the pandemic. Inspectors from one area office said the number of incoming complaints was overwhelming, while inspectors from another area office described not being able to give cases the full attention they would have received, prior to the pandemic.

This workload was exacerbated by staffing challenges throughout the agency. Inspectors or managers from three of five area offices we spoke with described experiencing staffing challenges during the pandemic, including high turnover and high numbers of inexperienced staff, who could not conduct inspections on their own.

The volume of COVID-19-related work varied across the country because the pandemic’s impact differed from area to area. Staffing shortages varied among offices, and certain area offices developed useful strategies for addressing these challenges. For example, officials from one area office described a helpful practice of directing phone calls from the public, or other work, to another area office that had fewer COVID-19-related complaints.

Workload concerns also made citing COVID-19-related violations challenging because of the substantial time commitment needed for inspectors to collect the evidence and documentation necessary to support a citation. Inspectors or managers from three of five area offices we spoke with described challenges during the COVID-19 pandemic with meeting the requirement that citations must be issued within 6 months of the violation. Particular challenges included the large amount of paperwork required for a COVID-19 citation, and inspectors sometimes learning of a COVID-19-related fatality several months after it occurred—when much of the 6-month window had already expired.[184]

Resource challenge: telework and technology. OSHA headquarters officials said the agency was very well prepared to transition operations from in-person inspections and office work to telework in response to the pandemic, aside from occasional minor issues with technology. However, based on our interviews, comfort with telework and advance preparation for telework varied across area offices and individual OSHA staff.

Some inspectors from all five area offices we spoke with described challenges with technology, including scanning and printing enforcement-related documents, while other inspectors from two of these five offices described positive experiences working remotely. According to OSHA officials, many regions have electronic case file pilot programs in place, and the agency is working to implement electronic case files nationwide, though the standard OSHA case file remains paper-based. Officials noted that, even once electronic case files are implemented nationwide, OSHA will continue accepting paper materials from employers and workers, which would then need to be scanned into the electronic case files, and some documents that are generated electronically will still need to be printed and mailed to employers.

Communication and guidance challenge: Guidance and tools for inspectors provided later than needed. Inspectors from all five area offices we spoke with described challenges in performing their roles due to a lack of timely guidance from OSHA headquarters, or frequent guidance changes. An inspector from one area office stated that OSHA’s COVID-19-related guidance often conflicted with guidance and recommendations from other government agencies. OSHA headquarters officials said they provided information to inspectors regularly during the pandemic, including interim enforcement memoranda, via OSHA’s internal webpage, by email, and through meetings with regional offices. However, inspectors in the area offices said the lack of timely guidance affected their operations in the following ways:
  • Inspectors from one area office described “scrambling” early in the pandemic to figure out how to apply existing standards to COVID-19 hazards and said they did not know how to advise employers and others who asked for guidance.
  • According to inspectors from another area office, the lack of adequate guidance from the Solicitor of Labor made citing COVID-19-related violations time-consuming and difficult. Inspectors said they did not know, in advance of the Solicitor’s review of COVID-19-related violation cases, what supporting documentation would be required.[185] According to headquarters officials, as they conducted more COVID-19 violation reviews, OSHA issued guidance on common citation language to reflect lessons learned and guide inspectors going forward. Headquarters officials also said the agency posted templates for preparing COVID-19-related citations in November 2020—8 months into the pandemic.
  • A tool to calculate the probability of exposure to COVID-19 was provided in April 2021, leaving the office without this type of resource for too long, according to inspectors from one area office.

Communication and guidance challenge: difficulty finding and using the most up-to-date guidance. OSHA headquarters officials told us that a COVID-19 team scans Centers for Disease Control and Prevention, National Institute for Occupational Safety and Health, and Food and Drug Administration websites for updates to COVID-19 employer guidance on a daily basis, and emails policy updates to regional offices. The regional offices would then send the updates to area office leadership, who would send them to inspectors.

This method resulted in communication inconsistencies and gaps. According to inspectors from three of five area offices we spoke with, the frequent changes in guidance were difficult to keep track of; this led to inspector confusion about which guidance was in effect, according to inspectors from one area office. For example, inspectors from another area office we spoke with said that they were unsure how to handle changing N-95 mask-fit testing requirements, particularly for employers like nursing homes that were unfamiliar with this requirement. Specifically, they noted it was challenging to determine whether to cite these workplaces for violation of a standard they were not familiar with due to the frequently changing guidance.

Communication and guidance challenge: managers unaware of inspectors using COVID-19-related adapted enforcement methods. In some selected area offices, managers seemed unaware of inspectors using enforcement methods that had been adapted due to the pandemic, limiting their ability to oversee and evaluate those methods. For instance, managers from one area office we spoke with said their inspectors had conducted only one inspection remotely, while inspectors from that office said they had regularly used remote inspections during the pandemic. OIS data indicate that inspectors have used adapted enforcement methods during the pandemic, including conducting inspections remotely. As shown in the above figure on enforcement activities based on report type, OSHA enforcement also shifted substantially from inspections to informal inquiries during the pandemic months.

Additionally, managers from the same area office said they had not used citation discretion (i.e., not citing a violation for an identified hazard, due to extenuating circumstances or employer good faith efforts), while inspectors from that office said they used this discretion.

Communication and guidance challenge: OSHA officials had different understandings of the OIS code developed to track inspectors’ use of citation discretion, and inspectors may have used it inconsistently throughout the pandemic.[186] From February 2020 through August 2021, the OIS code for citation discretion was used 4 times, indicating limited use of this discretion. While some OSHA headquarters officials said the OIS code should only apply to citation discretion involving certain requirements, other OSHA headquarters officials said that all instances of citation discretion should be tracked using this code.[187] In addition, inspectors from all five area offices we spoke with described using this citation discretion, but not consistently using the designated OIS code to track it.

Communication and guidance challenge: lack of process for sharing of promising practices among area offices. OSHA may have missed opportunities to share knowledge and tools among area offices throughout the pandemic. While some area offices and regional offices developed unique practices and tools to enhance their efforts during the pandemic, OSHA did not have a process in place for area offices to systematically share promising practices with each other during the pandemic. Inspectors or managers from all five area offices we spoke with described a number of unique practices that area and regional offices had implemented during the pandemic; for example, creating web-based document management sites to share templates, guidance, and other documents, developing systems to help area offices protect OSHA staff, and coordinating solutions to technology challenges. Managers from two of five area offices we spoke with said it would be good if OSHA were to compile promising practices and lessons learned to better prepare for another emerging issue.

In August 2021, OSHA headquarters officials said they had not yet conducted a formal evaluation or formally collected lessons learned or helpful practices for operating during a pandemic from area offices. Federal internal control standards state that agencies should evaluate issues and remediate deficiencies. OSHA officials cited the ongoing pandemic as the reason they had not performed such an assessment and said they intended to do so when feasible. However, even while the COVID-19 pandemic is ongoing, analyzing OSHA’s response—including its response to challenges it has faced, such as those related to resources and to communication and guidance—and taking related actions as warranted would enable OSHA to make improvements to better support ongoing enforcement efforts during the COVID-19 pandemic and prepare for operations during any future pandemic.

Methodology

To conduct this work, we reviewed OSHA guidance and enforcement policy, relevant federal laws and regulations, and the most recent OSHA data through August 2021.[188] To assess the reliability of OSHA’s data, we reviewed technical documentation and interviewed OSHA officials. We determined that OSHA’s data were sufficiently reliable for the purposes of our reporting objectives. We also interviewed OSHA headquarters officials, and managers and inspectors from 5 of OSHA’s 89 area offices, selected to represent areas with industries affected by COVID-19 and a higher than average number of COVID-19-related complaints, employer reports, and referrals from February through September 2020, among other things.

Agency Comments

We provided DOL and the Office of Management and Budget (OMB) with a draft of this enclosure. OMB did not provide comments on this enclosure. DOL provided written comments, reproduced in appendix VIII, and technical comments, which we incorporated as appropriate. In its comments, DOL partially agreed with our recommendation to assess—as soon as feasible and, as appropriate, periodically thereafter—various challenges related to resources and to communication and guidance that OSHA has faced in its response to the COVID-19 pandemic and take related actions as warranted.

DOL stated that the agency agrees that it is important to assess lessons learned and best practices for OSHA’s operational response to COVID-19. However, DOL officials said they believe that while the pandemic is ongoing, the agency’s resources are best used to help employers and workers mitigate exposures to COVID-19. DOL stated that the agency intends to conduct a review of OSHA’s response to the COVID-19 pandemic after operations return to normal.

However, it is unclear when the COVID-19 pandemic will end, and OSHA analyzing its response and taking related actions, as warranted, even as the pandemic is ongoing, would enable the agency to improve its enforcement efforts during this pandemic, in addition to helping it prepare for operations during any future pandemic. We continue to believe that assessing—as soon as feasible and, as appropriate, periodically thereafter—various challenges that OSHA faced in responding to the pandemic, and taking related actions, would enhance transparency and accountability in the federal government’s response to, and recovery from, the COVID-19 pandemic.

GAO’s Ongoing Work

Our review of worker safety and health during the COVID-19 pandemic is shifting to focus on the safety and health of workers at meat and poultry processing plants during the pandemic. We will continue to examine OSHA’s efforts to protect workers in these industries, and monitor developments in overall worker safety and health during the ongoing pandemic.

GAO’s Prior Recommendations

The table below presents our recommendations on Worker Safety and Health from prior bimonthly and quarterly CARES Act reports.
Prior GAO Recommendations Related to Worker Safety and Health

Recommendation

Status

The Assistant Secretary of Labor for Occupational Safety and Health should develop a plan, with time frames, to implement the agency’s oversight processes for COVID-19-adapted enforcement methods, as described in its pandemic enforcement policies. (January 2021 report)

Open—partially addressed. The Department of Labor (DOL) neither agreed nor disagreed with our recommendation. The Occupational Safety and Health Administration’s (OSHA) COVID-19-adapted enforcement methods continue to lack firm oversight plans. We reported in January 2021 that OSHA did not have specific plans or time frames for how and when to conduct the oversight of its COVID-19-adapted enforcement methods that was outlined in the agency’s pandemic-related enforcement policy—to ensure the methods are effective.
  • For oversight of remote inspections, in May 2021, OSHA officials said that the agency was no longer planning to conduct the oversight outlined in its May 2020 pandemic-related enforcement policy, which provided guidance to inspectors for COVID-19-related enforcement until the March 2021 pandemic-related enforcement policy was issued. Instead, officials said that follow-up for some, but not all, remotely-conducted inspections would be performed according to area offices’ discretion as part of OSHA’s COVID-19 National Emphasis Program (NEP), as resources permit area offices to focus more on programmed inspections.
  • For oversight of informal inquiries conducted in place of inspections, in February 2021, OSHA officials said that they planned to conduct follow-up inspections for a random sample of cases where COVID-19-related informal inquiries were conducted. However, this plan would target all informal inquiries, and not just those that were conducted in place of inspections because of the pandemic, as originally planned in OSHA’s May 2020 enforcement policy. This change in sampling technique could make it less likely that the cases meriting further scrutiny would be identified for follow-up. In August 2021, OSHA officials told us they would consider this issue when they make further plans for this oversight.
  • For oversight of citation discretion, in February 2021, OSHA officials said that they would conduct a follow-up inspection for each case coded in the OSHA Information System (OIS) as having used discretion to not cite violations. OSHA’s COVID-19 NEP includes instructions for conducting these follow-up inspections. However, it is unclear whether all instances where citation discretion was used can be identified in order to conduct follow-up inspections, as discussed below.

In September 2021, OSHA officials said that the agency intends to conduct a “comprehensive lookback” on OSHA’s response to the COVID-19 pandemic after the pandemic ends. While such a review is the subject of our October 2021 recommendation, it is unclear whether it would meet the intent of this recommendation to develop a plan for the specific oversight processes for COVID-19-adapted enforcement methods that OSHA described in its pandemic enforcement policies. The oversight processes described in this recommendation are specifically intended to evaluate the effectiveness of adapted enforcement methods used throughout the pandemic. We therefore continue to recommend that OSHA complete specific plans for its oversight of informal inquiries conducted in place of inspections and its citation discretion or clearly state that these specific oversight plans have changed.

The Assistant Secretary of Labor for Occupational Safety and Health should ensure that the Occupational Safety and Health Administration Information System includes comprehensive information on use of the agency’s COVID-19-adapted enforcement methods sufficient to inform its oversight processes for these methods. (January 2021 report)

Open—partially addressed. DOL neither agreed nor disagreed with our recommendation. OSHA continues to be unable to reliably track some of its COVID-19-adapted enforcement methods. We reported in January 2021 that OSHA could not reliably track some types of adapted enforcement methods in OIS, which may hinder its ability to conduct its planned oversight. For example, although OIS documents when informal inquiries are used, in general, it does not identify when the informal inquiry constituted an adapted enforcement method—that is, when COVID-19-related constraints caused an area office to use an informal inquiry, in place of an inspection, to address a complaint, referral, or employer report. Therefore, OSHA does not know the extent to which this adapted enforcement method is being used. As a result, OSHA will not be able to target its oversight for this adapted enforcement method, once it makes plans to do so.

In addition, OSHA officials had different understandings of the OIS code developed to track inspectors’ use of citation discretion, and inspectors may have used it inconsistently throughout the pandemic. From February 2020 through August 2021, the OIS code was used 4 times, indicating limited use of this citation discretion. This may be due to confusion concerning how OSHA is tracking citation discretion.
  • Some OSHA headquarters officials told us that the OIS code should only apply to citation discretion involving certain requirements.
  • Other OSHA headquarters officials told us that all instances of citation discretion would be tracked using this code.
  • OSHA does not have a method to ensure that inspectors are consistently using the designated code to identify cases where inspectors observed violations, but did not cite them, according to OSHA officials.
  • Finally, inspectors from all five area offices we spoke with described using this citation discretion, but did not consistently use the OIS code to track it.

As a result of this confusion, follow-up inspections that OSHA has planned to monitor this COVID-19-adapted enforcement method may not cover all instances when it was used. As of August 2021, OSHA officials said they had conducted an informal review to identify inspections with the OIS code for citation discretion, and that they had worked with regional offices to identify any instances when the code had been recorded in error. In August 2021, officials said that OSHA was conducting a final review, to determine the number of inspections that had been accurately coded as using citation discretion, and the results of any follow-up. Until OSHA completes this final review, we will be unable to assess whether it addressed all of our above concerns.

In September 2021, OSHA officials said that OIS allows for sufficient coding. They also stated that relevant citation discretion is no longer in use. However, OSHA has not responded to our concerns about tracking informal inquiries used in place of inspections. OSHA also has not provided more information on the agency’s final review of its use of the citation discretion OIS code, described above. We therefore continue to recommend that OSHA ensure that OIS includes comprehensive information on the use of the agency’s COVID-19-adapted enforcement methods sufficient to inform its oversight processes for these methods.

The Assistant Secretary of Labor for Occupational Safety and Health should determine what additional data may be needed from employers or other sources to better target the agency’s COVID-19 enforcement efforts. (January 2021 report)

Closed—addressed. In February 2021, OSHA said that, in response to our recommendation, it had determined that it did not need additional information from employers to identify where pandemic-related enforcement should be targeted. However, OSHA’s June 2021 health-care emergency temporary standard (ETS) specifically addressed the data gap that we identified in January 2021 related to employer reporting of COVID-19-related hospitalizations for certain health-care employers whose employees, OSHA determined, face “grave danger”. OSHA therefore did determine that it needed additional data from certain employers for its enforcement efforts, in accordance with our recommendation.
Source: GAO I GAO-22-105051

Related GAO Products

Workplace Safety and Health: Actions Needed to Improve Reporting of Summary Injury and Illness Data. GAO-21-122. Washington, D.C.: January 27, 2021.

Standards for Internal Control in the Federal Government. GAO-14-704G. Washington, D.C.: September 10, 2014.

Workplace Safety and Health: Multiple Challenges Lengthen OSHA’s Standard Setting. GAO-12-330. Washington, D.C.: April 2, 2012.

Contact information: Thomas M. Costa, 202-512-7215, costat@gao.gov

Child Care

The Office of Child Care is taking initial steps to ensure accountability over COVID-19 supplemental funds, and these funds—along with federal child care flexibilities—have been critical to states to help mitigate the impacts of the COVID-19 pandemic on child care, according to our 2021 national survey of state child care administrators.

Entity involved: Office of Child Care, Administration for Children and Families, within the Department of Health and Human Services

Background

The federal child care subsidy program known as the Child Care and Development Fund (CCDF) assisted, on average, about 1.3 million eligible children from low-income families per month in fiscal year 2018, the most recent year for which final data are available.[189] CCDF was appropriated nearly $62 billion in federal funds since the March 2020 declaration of COVID-19 as a national emergency—including more than $52 billion in CARES Act and other COVID-19 supplemental funds, in addition to annual appropriations, for CCDF to help states prevent, prepare for, and respond to the COVID-19 pandemic (see table).[190] CCDF is administered as a block grant to the states by the Office of Child Care (OCC), an office within the Department of Health and Human Services’ (HHS) Administration for Children and Families (ACF).[191]
Coronavirus Supplemental Appropriations to the Child Care and Development Fund (CCDF)

Act

Appropriations to CCDF

CARES Acta

$3.5 billion

Consolidated Appropriations Act, 2021, Division Mb

$10.0 billion

American Rescue Plan Act of 2021c

$39.0 billion

Total

$52.5 billion
Source: Pub. L. No. 116-136, div. B, tit. VIII, 134 Stat. 281, 557 (2020); Pub. L. No. 116-260, div. M, 134 Stat. 1182, 1914; and Pub. L. No. 117-2, §§ 2201, 2202, 135 Stat. 4, 31. I GAO-22-105051

aStates have until September 30, 2022, to obligate the CARES Act funds and until September 30, 2023, to spend them.
bDivision M of the Consolidated Appropriations Act, 2021 is the Coronavirus Response and Relief Supplemental Appropriations Act, 2021. States have until September 30, 2022, to obligate the Coronavirus Response and Relief Supplemental Appropriations Act, 2021 funds and until September 30, 2023, to spend them.
cThe American Rescue Plan Act of 2021 includes $24 billion in child care stabilization funds and $15 billion in supplemental CCDF funds. States have until September 30, 2022, to obligate the stabilization funds and until September 30, 2023, to spend them. States have until September 30, 2023, to obligate the supplemental CCDF funds and until September 30, 2024, to spend them.

In addition to COVID-19 supplemental funds for CCDF, the Small Business Administration’s (SBA) Paycheck Protection Program (PPP) provided a large potential source of funding to child care providers who applied and met program eligibility requirements, primarily to help keep workers employed.[192]

Overview of Key Issues

Availability of child care. COVID-19 notably impacted the availability of child care for families early in the pandemic, with the percentage of all open child care providers increasing throughout the year, according to our 2021 national survey of state CCDF administrators (see figure). States reported that, in March 2020, 59 percent of child care centers and 82 percent of home-based providers were open for business.[193] About one-half of states also reported that the availability of child care to meet the needs of essential and non-essential workers was greatly challenging in March 2020 (23 and 25 states, respectively).[194] However, five or fewer states reported child care availability for essential and non-essential workers as greatly challenging in December 2020.

Percentage of Open Child Care Providers Increased during 2020

Note: Our 2021 survey asked states to report on four points in time: March 31, June 30, September 30, and December 31, 2020. Our analysis was limited to states that reported data on open providers at each point in time. Data for child care centers were missing from up to 13 states. Data for home-based/family child care providers were missing from up to 15 states. The percentage of open home-based/family child care providers states reported in September 2020 was the same—93 percent—as in December 2020.

The availability of child care exceeded demand at times during the pandemic, according to some state CCDF administrators we interviewed, which may have mitigated the impact that closures had on families.[195] For example, administrators from two of the eight states we interviewed cited insufficient demand for their child care programs targeted to essential workers, such as hospital workers. Overall, according to state officials, the need for child care may have decreased as a result of changes to parental preferences due to concerns for health and safety, and more parents working from home. State officials added that these types of changes make it difficult for providers and states to plan for future child care needs.

Child care challenges. Alongside closures, child care providers faced many other challenges due to the pandemic—most frequently financial—according to our national survey. In March 2020, 39 of 50 states that responded to our survey rated as greatly challenging financial problems for providers due to (1) decreased child care enrollment and (2) temporary closures. By December, fewer states did so (35 and 26, respectively). Closely behind, 37 states reported that providers being able to obtain personal protective equipment or cleaning supplies was greatly challenging in March 2020. Overall, each of the top challenges states reported in our survey showed improvement between March and December 2020, as illustrated in the figure below.

Financial Problems for Child Care Providers Topped States’ List of Greatest Child Care Challenges in 2020

Note: The challenges shown were those that states most frequently rated as “very” or “extremely challenging” in March 2020.

Restrictions on the capacity of child care during the pandemic, including whether child care was considered safe to open, added financial strain to providers, according to some CCDF administrators we interviewed. One state administrator told us some providers were unable to maintain operations due to state-mandated reductions in numbers of children, group sizes, and ratios of children to staff. Officials in several states also noted that the pandemic exacerbated pre-existing challenges with staff recruitment and retention, due to increased health and safety concerns. State administrators told us that they struggled to appropriately balance the financial struggles of child care providers while also ensuring health, safety, and oversight of public funds.

Federal child care flexibilities. To mitigate COVID-19-related challenges for child care providers and families, states implemented various federal child care flexibilities, according to our national survey.[196] Of these flexibilities, states most often preserved (1) pay for child care providers, by paying them based on more generous absence day policies; and (2) subsidies for eligible children, by increasing the time before their next eligibility redetermination.[197] As shown in the figure below, however, states sometimes implemented flexibilities only on a short-term basis; by December 31, 2020, about one-half of states or more no longer used some of them.

Federal Child Care Flexibilities States Most Commonly Used During COVID-19

Note: This figure shows federal child care flexibilities implemented due to COVID-19 by at least 50 percent of states.

State CCDF administrators we interviewed said the use of federal flexibilities was vital to mitigate impacts of the pandemic. One administrator called the flexibility to change how states could pay providers (e.g., based on enrollment instead of attendance) the most useful. Others noted how their states’ use of certain flexibilities changed over time. For example, officials in one state said that from March through June 2020, the state paid providers based on enrollment, but since July 2020, it has continued to pay based on enrollment only if families attend child care at least 50 percent of the time.

Funding to respond to COVID-19. In our national survey, states most frequently reported using or planning to use CARES Act and Consolidated Appropriations Act, 2021, Division M (CAA) funds to help address their greatest COVID-19 related financial challenges.[198] Specifically, most states reported that they used or planned to use these funds to provide assistance to child care providers experiencing temporary closures or decreased enrollment, or to provide assistance to child care providers not receiving CCDF as of March 1, 2020 (see table). One administrator we interviewed said, for example, that being able to provide CARES Act funds to providers—whether they had previously received CCDF funds or not—helped to ensure as many providers as possible remained open during the pandemic.
State Uses or Planned Uses of CARES Act and Consolidated Appropriations Act, 2021, Division M (CAA) Funds

Uses of CARES Act or CAA funds

Number of states that reported using CARES Act funds

Number of states that planned to use CAA funds

Provide assistance to child care providers experiencing temporary closures or decreased enrollment due to COVID-19

46

46

Provide assistance to child care providers not receiving Child Care and Development Fund funding as of March 1, 2020

42

42

Provide child care assistance to essential workers regardless of income

29

15

Pay two child care providers for the same child for the same time perioda

24

11

Support child care resource and referral agencies

14

19

Support family child care network(s) as a means to increase supply of home-based child care providers

8

13
Source: GAO Survey of State Child Care and Development Fund Administrators, 2021. | GAO-22-105051

Note: The CAA was enacted in December 2020, a few weeks before our survey was deployed, and the American Rescue Plan Act of 2021 was enacted in March 2021, after our survey had been sent to state child care administrators.
aOCC guidance states that CARES and CAA funds can be used to pay two providers for the same child should one of the providers be temporarily closed due to COVID-19.

OCC provides guidance to states regarding flexibility to spend their annually appropriated CCDF funds during times of national or state emergency, and 29 states reported in our national survey that they also used CCDF funds intended to improve the quality of child care services to respond to the pandemic.[199] States reported using these funds in various ways, including to help providers obtain critical supplies and personal protective equipment, complete health and safety training, and obtain financial assistance, through grants or direct payments, as a result of decreased enrollment or temporary closures. In deciding when to use CARES Act or CCDF funds, state administrators we interviewed said they considered various factors, such as when funding was available, allowable uses, and the period in which funds must be spent.[200]

Paycheck Protection Program. The Paycheck Protection Program (PPP) was also a large source of federal financial assistance for the child care market. According to our analysis of SBA data, child care providers received more than $5.5 billion in PPP loans. In total, 97,965 child care providers received 133,100 PPP loans, according to our analysis.[201]

Small child care providers received more PPP loans than larger providers, but a smaller share of the overall amount loaned, according to our analysis of SBA data. Providers that reported having zero to two employees received about 60 percent of the loans whereas larger providers with six or more reported employees received about 33 percent of the loans (see fig.).[202] In total, however, larger providers received about $4.4 billion of the approximately $5.5 billion loaned to child care providers through PPP, likely because the amount of the loan a borrower was eligible to receive was based on the size of their payroll. The median loan amount providers received ranged from about $10,200 for providers with zero or one employee to about $91,600 for providers with 11 or more employees.

Small Child Care Providers Received More Paycheck Protection Program Loans than Larger Providers

Note: Canceled loans were excluded from our analysis. Borrowers may have reported having zero employees if they were, for example, sole proprietors, independent contractors, or self-employed individuals, although SBA application instructions stated that these borrowers should enter one for number of employees.

We also found that areas with high minority populations or high poverty received more PPP loans relative to their representation within the overall U.S. population.[203] Specifically, providers in areas with high minority populations, which include about 58 percent of the overall U.S. population, received about 67 percent of the PPP loans. High poverty areas, which include about 14 percent of the overall U.S. population, received about 20 percent of the PPP loans.[204]

OCC oversight. OCC has adapted or plans to adapt existing oversight practices to help ensure the accountability of COVID-19 supplemental funding. For instance, OCC added a column to its quarterly financial reporting form to capture information on state CARES Act expenditures, and officials said they will do the same for state CAA and American Rescue Plan Act of 2021 (ARPA) expenditures.[205] OCC also modified annual administrative reporting requirements and asked states to estimate, among other things, how many families and children were served whose subsidy was fully or partially paid using CARES Act funds.

OCC officials said they plan to also collect other information specific to CAA and ARPA funds, as appropriate. For instance, OCC officials said they will collect information about the number and characteristics of providers that receive an ARPA child care stabilization grant, and are seeking public comment.[206] OCC is also seeking public comment to collect information on state uses of CCDF quality funds, including funds designated specifically for quality infant and toddler care and ARPA child care stabilization grants. Additionally, OCC officials said they plan to discuss state uses of COVID-19 supplemental assistance during upcoming on-site or virtual monitoring visits beginning October 2021.[207]

Methodology

To conduct this work, we reviewed relevant federal laws and agency guidance and interviewed OCC and SBA officials, and CCDF administrators in eight states. We selected these states based on the prevalence of COVID-19 among adults and children and for geographic diversity. Additionally, we surveyed state CCDF administrators in 50 states and the District of Columbia between January and March 2021, and received responses from all but one state. We also analyzed SBA PPP loan data and used U.S. Census Bureau, American Community Survey data (2015 through 2019, the most recent data available) to identify census tracts with certain demographics. We determined that these data were sufficiently reliable by interviewing federal officials and performing data checks to identify any missing data, outliers, or errors.

Agency Comments

We provided HHS, SBA, and the Office of Management and Budget (OMB) with a draft of this enclosure. HHS provided technical comments, which we incorporated as appropriate. SBA and OMB did not provide comments on this enclosure.

GAO’s Ongoing Work

We will continue to review states' implementation of the various coronavirus relief and recovery packages to identify long-term strategies for improving the child care industry and supporting child care businesses, including the use of grants and/or contracts, improving payment practices, and strategies to recruit and retain the workforce.

Contact Information: Kathryn A. Larin, (202) 512-7215, larink@gao.gov

K-12 Education

Disruptions due to the COVID-19 pandemic led hundreds of thousands of students nationwide—primarily vulnerable students, such as those who are English learners or low-income—to miss days or weeks of virtual instruction or not show up for school at all during the 2020-2021 school year.

Several states conducted outreach to locate and re-engage these disconnected students. As education is primarily a state and local responsibility, these efforts undertaken by selected states may provide insights for educators nationwide attempting to reach these students, which is especially important as the pandemic continues to affect schools during the 2021-2022 school year.

Entity involved: The Office of Elementary and Secondary Education within the U.S. Department of Education (Education).

Background

The COVID-19 pandemic significantly disrupted the lives of students, families, and teachers nationwide, and the consequences may be felt for some time. For example, when school buildings closed during the 2020-2021 school year, many students, especially low-income students, did not have the devices and internet access they needed for virtual (online) learning. Even though many schools have provided students with computers and internet access to participate in virtual instruction, many students faced difficulties staying engaged in school. As a result, hundreds of thousands of students—possibly as many as three million students, according to one estimate—missed days or weeks of instruction or disappeared from school altogether.[208] Research and media reports have identified many reasons why students disconnect from school, such as having parents who are frontline workers and cannot stay home to help them with virtual learning, or the student having responsibility to assist younger siblings.

To help address the impact of the pandemic, Education has distributed to states COVID-19 relief funds that can be used for a broad range of needs, including efforts to address learning loss and engage students in virtual instruction.[209] In addition, Education has established the Student Engagement and Attendance Center, which supports states and school districts in a variety of activities, such as identifying strategies to reengage with students and families to facilitate learning recovery.

Overview of Key Issues

The pandemic caused or exacerbated many inequalities faced by students, making it more likely for some to disengage from school, particularly those who were already vulnerable. Public schools nationwide experienced significant declines in student enrollment during the 2020-2021 school year, according to the National Center for Education Statistics, with some students shifting to homeschooling.[210] States used a variety of efforts to locate unaccounted for students and re-engage them, but incomplete contact information for some students made this more difficult.

Vulnerable students were more likely to disengage from school. Officials in our four selected states said that certain groups of vulnerable students—such as students with disabilities, English learners, and those from low-income families—more often disengaged from school due to pandemic related barriers. (See table.)
Examples of Vulnerable Student Groups and Barriers to Staying Engaged in School During the COVID-19 Pandemic, According to Officials from Selected States, School Year 2020-2021

Student group

Examples of challenges offered by state officials

Disabilities

It was more difficult during the pandemic for some students to receive special education services, such as physical therapy and speech therapy, which are typically provided in person. These services were offered online but are more difficult to provide in an online setting.a

English Learners

Some parents of students for whom English is not their first language had additional difficulty working with schools and school staff to support their students. The language barrier meant parents did not always know how to ask for help to address problems with learning at home.b

Foster Care

Some students in foster care did not want to participate in virtual classes or turn on their device’s camera because their foster facilities were noisy, distracting, or messy, and potentially embarrassing.

Homeless

Some students experiencing homelessness were very mobile during the pandemic, including students who moved around in families, shelters, and potentially out of state. These students often lacked access to or had spotty connections to the internet, devices, and a quiet place to learn and complete assignments.

Low-income

Many students in low-income families disengaged from school during the pandemic to take jobs and handle other responsibilities to support their families. In some cases, parents were in poor health or lost their jobs, meaning students had to work or care for siblings.

Native American

Some Native American students did not have reliable internet connectivity or access to direct educational support they normally received at school.c
Source: GAO analysis of information from state officials in California, Mississippi, New Mexico, and South Carolina. | GAO-22-105051

aWe found that a variety of factors complicated the delivery of special education services to students during the COVID-19 pandemic. These factors include the wide range of needs of students with disabilities served under the Individuals with Disabilities Education Act (IDEA); the services specified in their individualized education programs; and the capacity of parents or caregivers to assist teachers and service providers in delivering general education, specialized instruction, and related services to their children. See GAO, Distance Learning: Challenges Providing Services to K-12 English Learners and Students with Disabilities during COVID-19, GAO-21-43 (Washington, D.C.; Nov. 19, 2020).
bWe found that some English learners and their families had difficulty fully participating in distance learning during spring 2020 due to a lack of necessary technology, language barriers, and the demands of meeting basic family needs. Also, limited English comprehension affected the ability of families to assist students with the curriculum, according to representatives of professional associations and a technical assistance center. See GAO-21-43.
cBureau of Indian Education-funded schools faced additional pandemic difficulties related to distance learning and internet connected devices during the 2020-2021 school year. See GAO, Indian Education: Schools Need More Assistance to Provide Distance Learning, GAO-21-492T (Washington, D.C.: Apr. 28, 2021).

States reported outreach efforts to locate and re-engage disengaged students. Officials in our selected states said they took a variety of approaches to locate and re-engage disengaged students (see table). State officials stressed the importance of relationships between students and teachers as a key factor in re-engaging students who were not participating in virtual learning during the pandemic. In addition, representatives from a non-profit organization that works with disengaged students said state leadership in developing and implementing outreach efforts is important, as many school districts do not have the resources. However, incorrect contact information for families that was outdated due to the pandemic made it more difficult to locate or work with students, according to state officials and the non-profit organization.[211]
Examples of Reported Efforts to Engage K-12 Students Disconnected by COVID-19 Pandemic during the 2020-2021 School Year, in Selected States

California

Mississippi

New Mexico and South Carolina

Effort

Learning Continuity and Attendance Plans

School Attendance Officers

Academic Coaches

Description

California asked school districts to create plans detailing their engagement efforts during the pandemic, including efforts to engage disconnected students.

This information included how the school district was going to accelerate learning, close the technology gap, provide virtual learning, support teachers and provide social and emotional support to students, and engage and re-engage students.

Mississippi employs school attendance officers who attempt to locate and re-engage disconnected students and were asked to focus on these students during the pandemic.

Attendance officers take a team approach and work with schools and student families as part of the process.

New Mexico and South Carolina separately contracted with a non-profit organization to conduct outreach and re-engagement work with disconnected students.

This program provides students with a personal academic coach to help them overcome social, emotional, and academic barriers as well as answer questions about technology and curriculum, and connect students to community support.

Academic coaches can connect with students by phone, email, and social media and interview students about the barriers they face to learning.

Officials in both states said they initially targeted students who had the highest need, and they reported that as they saw the effort benefiting students, they expanded access to the program.
Source: GAO summary of information from state officials in California, Mississippi, New Mexico, and South Carolina. | GAO-22-105051

Note: States may also refer to disconnected students as chronically absent and academically at risk.

State officials also shared a number of school-district-level efforts to address unaccounted for and disengaged students, including virtual and in-person tutoring offered at various times, providing additional social-emotional support, and partnering with expanded service providers to make home visits and work with students, such as the Boys and Girls Clubs of America. Some school districts are providing targeted summer enrichment activities to students, according to state officials.

States have seen significant declines in public school enrollment, especially in kindergarten. Public school enrollment in our selected states was down by tens of thousands of students in the 2020-2021 school year, and officials in our selected states said that this decline was mostly due to the pandemic. Officials in California told us that over 160,000 fewer students (including over 60,000 fewer kindergarteners) enrolled in the 2020-2021 school year than in the previous school year. Although enrollments in California’s public schools had been decreasing annually, officials said the decline during the pandemic was far greater than in prior years. In all four states, the largest declines occurred in elementary school grades, in part because many families chose not to enroll their children in kindergarten, according to the some of the officials we interviewed. They said these students will be less prepared for first grade, and this condition would place more pressure on first grade teachers to cover missed material. Or, alternatively, the students could enter as older kindergarteners, which will put additional strain on kindergarten teachers and resources.

Students who left traditional public schools enrolled in private schools or public charter schools, were homeschooled, or reported no engagement in educational activities, according to officials we interviewed and data they provided. For example, officials in California shared information that showed parent registrations for private school and homeschool in school year 2020-2021 more than doubled over the previous year. In New Mexico, homeschool was the most common choice for families who did not re-enroll in public schools, according to information provided by state officials.[212]

Several thousand students were still unaccounted for toward the end of 2020-2021 school year. Even with these states’ outreach efforts, officials in our selected states told us that some students remained unaccounted for towards the end of the 2020-2021 school year.[213] For example, officials in Mississippi said that even though, as of December 2020, they had over 2,700 unaccounted for students, that was a significant improvement from about 23,000 unaccounted for students they had at the beginning of the school year. Similarly, New Mexico had 2,010 unaccounted for students as of July 2021 compared to the 12,000 unaccounted for students at the beginning of the school year.

Methodology

To review how states addressed the engagement of students in virtual learning as a result of the pandemic, we interviewed state education officials in California, Mississippi, New Mexico, and South Carolina. We selected these states based on their enrollment and attendance data related to disconnected students for the 2020-2021 school year, information about their efforts to engage disconnected students, and demographic information, including proportion of students from low-income families, in different racial and ethnic groups, and states’ diverse geographic locations.[214] We also reviewed related documentation provided by these states. We interviewed representatives of a non-profit organization that works with state educational agencies to address the needs of disconnected students, including in New Mexico and South Carolina.

Agency Comments

We provided Education and the Office of Management and Budget with a draft of this enclosure. Education provided technical comments, which we incorporated as appropriate. The Office of Management and Budget did not provide comments on this enclosure.

GAO’s Ongoing Work

We will continue to monitor Education’s efforts to help schools recover from the pandemic, how states and school districts are using the COVID-19 relief funds, and the challenges of pandemic-related learning loss and the approaches educators are finding to effectively address it.

Related GAO Products

Indian Education: Schools Need More Assistance to Provide Distance Learning. GAO-21-492T. Washington, D.C.: Apr. 28, 2021.

Distance Learning: Challenges Providing Services to K-12 English Learners and Students with Disabilities during COVID-19. GAO-21-43. Washington, D.C.: Nov. 19, 2020.

Contact information: Jacqueline M. Nowicki, (617) 788-0580, nowickij@gao.gov

Child Nutrition

The Food and Nutrition Service and states have used a variety of approaches to oversee child nutrition programs during the COVID-19 pandemic. However, states identified ongoing challenges with overseeing these programs, and the Food and Nutrition Service may be missing opportunities to fully leverage lessons learned from the pandemic to improve the management of child nutrition programs.

Entity involved: Food and Nutrition Service, within the Department of Agriculture

Recommendation for Executive Action

The Secretary of Agriculture should document the Department of Agriculture’s plan to analyze lessons learned from operating child nutrition programs during the COVID-19 pandemic. This plan should include a description of how the department will gather perspectives of key stakeholders, such as Child and Adult Care Food Program institutions and nonschool Summer Food Service Program sponsors. The Department of Agriculture generally concurred with this recommendation.

Background

Child nutrition programs administered by the Department of Agriculture’s (USDA) Food and Nutrition Service (FNS) supply cash reimbursements to schools or other programs for meals and snacks they provide to eligible children. In fiscal year 2019, before the pandemic, the four largest programs—the National School Lunch Program (NSLP), School Breakfast Program (SBP), Summer Food Service Program (SFSP), and Child and Adult Care Food Program (CACFP)—along with other child nutrition programs, received $23.1 billion in federal funds.[215]

During a typical year, NSLP and SBP subsidize meals for nearly 30 million children in approximately 95,000 elementary and secondary schools nationwide. These two programs are the largest of the child nutrition programs and typically serve children at school during the school year. In addition, SFSP and the Seamless Summer Option (SSO) typically provide meals for school-age children during the summer months.[216] Finally, CACFP provides meals to younger children enrolled for care at participating child care centers and day care homes and to school-age children participating in CACFP At-Risk Afterschool programs.[217]

The Families First Coronavirus Response Act (FFCRA) granted FNS authority to issue nationwide waivers in certain programs for specific purposes.[218] As we reported in July 2021, FNS extended several nationwide waivers in April 2021 for the 2021–22 school year.[219] FNS also issued a pair of waivers to allow schools to operate SSO during the school year and to claim SSO meals at the higher SFSP reimbursement rate. These waivers are intended to support access to nutritious meals, reduce the administrative burden associated with eligibility determinations, and minimize potential exposure to COVID-19.[220]

FNS’s National Office is responsible for providing regulatory guidance, policy materials, and monitoring tools to its seven regional offices, which have the primary responsibility for oversight of state agencies administering child nutrition programs. Typically, regional offices monitor program compliance through management evaluations. In the course of management evaluations during typical years, regional officials review program areas through a combination of off-site and on-site monitoring activities.

At the state level, state agencies—generally education or agriculture agencies—administer the programs and issue guidance to school district nutrition programs and other local program operators.[221] The state agencies responsible for child nutrition oversee school meal programs, which includes conducting administrative reviews of local operators’ administration of such programs. These reviews must include the accuracy of meal counting and claiming, nutritional quality, resource management, and other focus areas. State agencies also conduct regular reviews of local program operators’ administration of CACFP and SFSP. School district nutrition programs and other local program operators are responsible for certifying students as eligible for free or reduced-price meals and for counting and claiming eligible meals for federal reimbursement, among other monitoring activities.

FNS has issued several nationwide waivers related to program monitoring activities during the pandemic to facilitate state and local monitoring of the child nutrition programs while allowing for social distancing for staff. Most recently, FNS issued three waivers allowing state agencies and local operators to conduct monitoring entirely off-site, rather than both off-site and on-site, for the school meal programs (NSLP, SBP, and SSO) and CACFP until 30 days after the end of the public health emergency.

Various COVID-19 relief laws have provided funding or authority to USDA to support child nutrition programs during the pandemic. For example:
  • The Families First Coronavirus Response Act (FFCRA), enacted in March 2020, authorized and provided an indefinite appropriation for a new program, Pandemic Electronic Benefits Transfer (Pandemic EBT), which provides benefits to purchase food to households with children who would have received free or reduced-price school meals if not for school closures due to COVID-19.[222] The program also provides these benefits to households with eligible children in child care. According to FNS, during the summer of 2021, Pandemic EBT benefits were offered to all eligible children who resided in states with approved Summer Pandemic EBT plans.[223] As of August 31, 2021, FNS had obligated $34.432 billion for Pandemic EBT.
  • The CARES Act, enacted in March 2020, provided $8.8 billion in supplemental funds.[224] As of August 31, 2021, FNS had obligated nearly all of this funding for child nutrition programs. According to FNS, it provided nearly all of this funding to states and other meal program operators and used the majority of the funds—$8.615 billion—to reimburse operators for the cost of meals served during the pandemic.[225]
  • The Continuing Appropriations Act, 2021 and Other Extensions Act, enacted in October 2020, extended certain waiver authority granted in the FFCRA through September 2021 and provided an indefinite appropriation to cover the costs incurred as a result of the waiver extensions.[226] As of August 31, 2021, FNS had obligated $1.470 billion of this funding for child nutrition programs.
  • The Consolidated Appropriations Act, 2021, enacted in December 2020, provided an indefinite appropriation to support CACFP institutions and school district nutrition programs that replaced some of the decline in reimbursement funding in spring 2020.[227]

Overview of Key Issues

School districts and other meal program operators served fewer meals during the first year of the pandemic than in the previous year, but the number of meals served in spring 2021 approached prepandemic levels. According to the most recent available data from FNS, during the first year of the pandemic (March 2020 through February 2021), school districts and other meal program operators operating NSLP, SBP, SFSP, and CACFP served 2.8 billion fewer meals than in the prior year—an overall drop of 30 percent.[228] The decline in meals served during the pandemic’s first year was not uniform among meal types. Compared with the number of meals served in the prior year, the number of lunches served through NSLP, SFSP, and CACFP dropped by 40 percent while the number of breakfasts served through SBP, SFSP, and CACFP dropped by only 14 percent. FNS officials attributed the smaller decline in breakfasts served to the packaging of multiple meals at a time for grab-and-go service.[229]

The numbers of meals served during March and April 2021, as the pandemic entered its second year, were closer to the numbers of meals served during March and April 2019, a year before the pandemic began (see figure). Specifically, in April 2021, as vaccines became widely available for American adults and more schools offered in-person learning, the number of meals served was only 9 percent lower than in April 2019.[230]

Total Meals Served in Key Child Nutrition Programs in 2019, 2020, and 2021, by Month, as of Sept. 10, 2021

Notes: The monthly totals include four child nutrition programs: National School Lunch Program, School Breakfast Program, Summer Food Service Program, and Child and Adult Care Food Program (child meals only). Totals also include meals served through the Seamless Summer Option, a program that allows school districts operating the National School Lunch Program and School Breakfast Program to continue using the same meal service rules and claiming procedures as in the regular school year throughout the summer and during unanticipated school closures. According to the Food and Nutrition Service (FNS), the number of meals reported for any given month is subject to marginal revisions over time for a variety of reasons, including late claims and changes resulting from routine monitoring activity.
The totals shown are for meals served each month before and during the pandemic. Pandemic-related disruptions to school meal programs began in March 2020. As we reported in July 2021, meals served during June and July 2020 were higher than in the same months in 2019. In 2020, some districts and other providers were able to provide meals throughout the summer without congregate feeding (i.e., by using a grab-and-go model), which allowed some areas to increase the overall number of meals served in the summer months in 2020 compared with prior years.
Data for meals served in April 2021 are the most recent data available as of September 10, 2021 that are sufficiently reliable for our purposes. According to FNS, state agencies submit monthly meal-claim reports to FNS; initial monthly tabulations reported 30 days after the end of the claim month include estimated data based on the previous year. However, the uncertainty of meal service during the COVID-19 pandemic has made it difficult for states to use historical data to report estimates of meals served, according to FNS. Data reported by states to FNS 90 days after the end of the claim month are based on actual meal claims rather than on estimates. We determined that 90-day data are sufficiently reliable for our purposes. According to FNS, these data are subject to revision.

FNS officials told us that the numbers of meals served approached prepandemic levels during March and April of the 2020–21 school year because more schools were feeding more children who were attending school in person rather than virtually. In August 2021, officials from two of the four states where we conducted interviews told us that their states had mandated that all schools provide in-person learning during school year 2021–22, while officials from two other states told us that schools could decide whether to offer a virtual instruction option. FNS officials anticipated that the increase in students attending traditional, in-person schooling in 2021–22 would result in more meals served than during school year 2020–21. Although the most recent data show the numbers of meals served during March and April 2021 were closer to prepandemic levels, the extent to which meals were served to low-income students is not known because of the expanded eligibility for free meals during the pandemic.[231]

FNS and state agencies used a variety of monitoring approaches while balancing competing priorities, and state agencies identified ongoing challenges to maintaining program integrity. Recognizing that child nutrition programs may operate differently during the pandemic given the numerous flexibilities and waivers provided—including nationwide waivers that allow all monitoring to be conducted off-site—FNS allowed states to waive traditional program monitoring requirements. This flexibility was provided to state nutrition offices that provided a waiver request to FNS that included an alternative oversight plan that ensured continued program integrity. According to FNS officials, FNS had approved more than 60 of these oversight plans as of June 2021.[232] FNS provided state nutrition offices with a framework and template for these plans, and officials from two of the four FNS regional offices where we conducted interviews reported helping state nutrition offices in their region develop their plans, either directly or by facilitating best practice–sharing sessions with other states. According to FNS officials, much of the state oversight during the pandemic has taken the form of technical assistance.

FNS oversight and monitoring. To ensure that state nutrition offices were following their FNS-approved plans and implementing waivers correctly, the FNS National Office asked FNS regional offices to monitor, in real time, the state offices’ implementation of the plans. Regional officials conducted real-time monitoring, known as touchpoints, for each state nutrition office by participating in three oversight activities per child nutrition program (NSLP, SFSP, and CACFP) and then providing a brief report of the activities to the FNS National Office. For example, if a state’s oversight plan said the state would offer webinars to program operators operating CACFP under the nationwide waivers, a regional official would attend the webinar and, if any of the information conveyed in the webinar was incorrect, provide technical assistance to the state nutrition office to correct the information. According to FNS officials, this monitoring was important because it allowed the regional officials to provide real-time technical assistance as the pandemic evolved.

According to FNS officials, in addition to conducting the real-time monitoring, FNS regional offices continued to conduct traditional, retrospective management evaluations during the pandemic. However, owing to capacity constraints and pandemic complications, they reported conducting fewer management evaluations than they would in a typical year, targeting areas that were still applicable during the pandemic and focusing on specific areas of concern. To determine which states and programs to review, FNS officials used a risk-based assessment tool to identify those for which the evaluations were most critical.

According to FNS officials, all management evaluations were conducted virtually; as a result, some portions could not be completed. For example, according to officials from one FNS regional office, warehouse reviews—an optional component of management evaluations for NSLP—have been put on hold during the pandemic to allow for social distancing. Officials from each state nutrition office we interviewed told us they had taken part in virtual management evaluations during the pandemic; in general, both state and FNS regional officials said these evaluations went well despite challenges. Because these reviews are retrospective, FNS officials from the National Office said they were aided by the regional office touchpoint reviews that provide timelier monitoring and technical assistance.

State agency oversight and monitoring. In a typical year, state nutrition offices conduct administrative reviews of a portion of their school district nutrition programs operating NSLP.[233] As a result of a flexibility allowing school districts to operate summer meal programs (through SSO and SFSP) rather than operating traditional school meal programs (through NSLP and SBP) during the pandemic, states have conducted fewer administrative reviews than is typical, according to state nutrition officials we interviewed. Specifically, as of June 2021:
  • Nutrition officials in two of the four states said they had conducted no administrative reviews during the previous school year. In one of the two states, nutrition official attributed this to the fact that none of the state’s school districts had operated NSLP. In the other state, where very few school districts chose to operate NSLP, state nutrition officials said they had focused their efforts on providing technical assistance rather than conducting administrative reviews.
  • Nutrition officials in the two states that conducted administrative reviews of the school districts that chose to operate NSLP reported conducting more of the review components off-site than is typical. According to FNS guidance, strategies for conducting virtual monitoring include, for example, reviewing and verifying records by observing photographs or videos in situations where direct observation would normally occur and conducting interviews via telephone or video conference.

Some state nutrition officials we interviewed said that, in addition to conducting traditional monitoring such as administrative reviews, they used various strategies for conducting real-time oversight during the pandemic as outlined in their oversight plans. For example, officials from two state nutrition offices reported providing targeted technical assistance to local operators with identified risk factors, such as significant recent staff turnover. Specifically:
  • Staff from one state nutrition office began in spring 2021 to make in-person coordinated support visits to high-risk school district nutrition programs. During these visits, they conducted components of administrative reviews with the local program operators to ensure the operators understood program requirements, including requirements concerning monitoring. Although the state nutrition office staff conducted most of these review components virtually before the visits, they conducted a limited portion of the reviews on-site by observing a meal service.
  • Staff from the other state nutrition office provided one-on-one technical assistance to school districts where they identified potential risks—for example, if they noticed meals being served to numbers outside the expected range or if the school nutrition program had new leadership. As of June 2021, this state nutrition office had conducted all of its pandemic monitoring and technical assistance virtually, using a variety of technology platforms.

According to state nutrition officials, these forms of technical assistance were intended to minimize confusion and assist operators in meeting program requirements. Some state nutrition officials noted that it can be difficult for local program operators to keep track of changes in program requirements that resulted from waivers.

Effects of competing priorities on monitoring. Federal and state nutrition officials we interviewed said that competing priorities, such as implementing waiver flexibilities and providing technical assistance, had created challenges to monitoring throughout the pandemic, particularly early on. For example, officials from FNS regional offices said that they delayed program monitoring at the start of the pandemic to help states interpret and implement the various FNS waivers. In general, FNS regional officials we interviewed said that they had not seen new types of program integrity concerns during the pandemic. However, officials from one regional office noted that state nutrition offices are affected by constrained resources, including time.

Additionally, because of a flexibility that allowed districts to operate summer meal programs during the regular school year, a wider variety of child nutrition programs were operating at the same time during the pandemic.[234] State nutrition officials from two states said that this had made monitoring and oversight more difficult because they were not accustomed to so many different child nutrition programs’ operating concurrently.

Challenges and benefits of off-site monitoring. Nutrition officials we interviewed at the federal and state levels reported encountering both challenges and benefits in virtual monitoring. According to the officials, insufficient technology made off-site monitoring difficult, particularly at the start of the pandemic, when many staff were adjusting to remote work and implementing new technology. For example, officials from one FNS regional office noted that some state nutrition offices were not set up to telework at the start of the pandemic and did not have systems to forward their office phones, which hindered communication. Similarly, virtual desk-audits can require operators to scan large quantities of documents, which can be time consuming; also, in some instances, operators did not have access to the technology. Another challenge affecting virtual monitoring was the lack of physical presence and face-to-face interaction, according to some state and FNS officials.

Despite these challenges, in addition to health and safety benefits, in general, nutrition officials at the state and federal level said that off-site monitoring had offered benefits, such as cost savings and limited travel. One state nutrition official we interviewed said that offsite monitoring had facilitated innovation because it caused the state nutrition office to reassess and streamline its monitoring process.

Considerations and ongoing challenges for program monitoring in school year 2021–22. To facilitate administrative reviews in the 2021–22 school year, FNS issued a waiver in May 2021 that allows states to conduct administrative reviews of school district nutrition programs operating only SSO (in addition to those operating NSLP).[235] Specifically, FNS waived certain administrative review requirements for programs operating only SSO during the school year and allowed the reviews to count toward state monitoring requirements. According to FNS officials, because administrative reviews are conducted on a multiyear cycle, this will help state nutrition offices to fulfill state monitoring requirements, given the April 2021 waiver allowing school districts to operate SSO during the school year.

According to nutrition officials in one state, they requested a monitoring waiver to extend their review cycle time by 1 year because they recognized that their state had conducted few, if any, administrative reviews in the prior school year and that conducting the necessary number of reviews in school year 2021–22 might be difficult. Nutrition officials in a second state said they were considering requesting a monitoring waiver for the same reasons. One state nutrition official expressed concern that after programs return to normal operations, the high degree of staff turnover in child nutrition programs and the length of time that programs will have operated with waivers could result in program integrity issues, such as lack of adherence to program requirements. According to FNS, allowing administrative reviews to continue for school districts operating only SSO should help ease the transition back to traditional program monitoring after the pandemic.

FNS is taking some steps to identify lessons learned for child nutrition programs from the pandemic, but it may be missing additional opportunities. FNS officials told us that they are primarily using an existing FNS School Meals Operations (SMO) study to gather information about lessons learned during the pandemic for child nutrition programs.[236] According to a notice in the Federal Register, this study will help FNS obtain (1) general descriptive data on characteristics of the child nutrition programs to inform the budget process and answer questions about topics of current policy interest; (2) program operations data to identify potential topics for training and technical assistance for state and school district nutrition programs; (3) administrative data to identify program trends and predictors; and (4) information on the use and effectiveness of the child nutrition waivers, which will be used to satisfy states’ reporting requirements on those waivers under FFCRA.[237]

Launched in spring 2021, the study will collect administrative and survey data on each of the four child nutrition programs from state agencies and will collect survey data from school district nutrition programs.[238] For example, as part of the state survey, FNS is collecting, as part of the state survey, perspectives from state agencies regarding state and local operational and financial challenges during the pandemic. FNS stated that because it recognized that the pandemic changed the way school meal programs operated, it expanded the SMO study’s data collection efforts—initially planned prior to the pandemic—to include gathering survey and administrative data from the state agencies that oversee the CACFP and SFSP.[239]

Agencies can leverage lessons learned from an event to inform future efforts and limit the chance of recurring challenges. The experience of providing meals to children during the pandemic presents an opportunity for FNS to assess potential lessons learned for managing child nutrition programs.[240] Although FNS officials told us that the SMO study will be used to gather information about lessons learned from the pandemic, as of July 2021, FNS was unable to provide us with a plan for how it intends to comprehensively analyze lessons learned from the pandemic for child nutrition programs.[241] Further, the Federal Register notice mentioned above does not indicate whether FNS will analyze lessons learned to address operational and financial challenges.

Although FNS is collecting some information on these topics from states, FNS may miss opportunities to comprehensively identify lessons learned during the pandemic unless it documents a plan for analyzing them. Further, according to FNS officials, while the SMO study will survey state agencies that administer the federal child nutrition programs, the study will not gather local perspectives directly from CACFP institutions (e.g., child care centers and day care homes) or SFSP sponsors that are not school districts.[242] Without gathering perspectives from a full range of meal program operators—including CACFP institutions and SFSP sponsors (discussed below)—rather than only from state agencies and school districts, FNS will lack comprehensive information to aid its future planning.

District and state child nutrition officials identified challenges as well as opportunities during the pandemic. Nutrition officials we interviewed from districts, states, and organizations identified several challenges and opportunities related to operating child nutrition programs during the pandemic. Specifically, the officials identified challenges and, in some cases, opportunities with respect to information technology (IT) systems, food supply and storage, loss of revenue for local meal operators, waiver rollout and extensions, and the possibility of making some flexibilities permanent.

IT systems. State officials we interviewed identified financial and resource burdens and potential challenges to maintaining program integrity related to their child nutrition IT systems during the pandemic. For example:
  • One state official explained that its state child nutrition information system was developed to be compatible with federal child nutrition programs under normal operations. The official said it took staff time and financial resources to update the state’s system to accommodate each new waiver that FNS announced.
  • Officials in a second state said that IT changes they made to accommodate waivers meant that built-in program integrity checks no longer functioned correctly. Instead, staff had to spend additional time conducting manual reviews to check for claims errors and help ensure program integrity.
  • Officials from the second state also said that institutions at the local level that operate CACFP are particularly prone to technological challenges. FNS officials in one regional office noted that day care homes that previously used libraries to submit claims electronically often had to mail hard-copy claims during the pandemic because of extended library closures.
  • Officials from three state agencies said that the pandemic highlighted opportunities for the federal government to limit the financial and resource burdens on their states, such as by investing in software, establishing a standalone fund to assist states with IT maintenance costs, and providing communication and technical assistance to states’ IT software vendors.[243]

Food supply and storage. Officials from 11 of the 12 districts and three of the four states where we conducted interviews, and others, identified food supply or food storage challenges to operating child nutrition programs during the pandemic. These officials identified the following supply challenges, among others:
  • Officials from two state nutrition programs said that districts experienced cancelations in their USDA Foods in Schools commodity orders because certain foods were no longer available.[244]
  • Officials from 11 district nutrition programs told us it was difficult to acquire items such as individually wrapped foods or certain types of foods, such as milk, breads, and proteins because of food shortages, competition, or both.
  • Officials from the National CACFP Sponsors Association told us that small, rural child care centers and day care homes may have found that required milk was not available on the day that they bought food for the week.

In addition, officials from half of the district nutrition programs in which we conducted interviews said that limits on storage space had prevented them from ordering food in large quantities or leveraging their USDA Foods in Schools commodities to offset pandemic-related costs. Officials from the Boys and Girls Clubs of America noted that storage space was also a challenge for local clubs providing food under SFSP and CACFP At-Risk Afterschool programs, especially if they were not colocated with schools, because they did not have access to additional storage located at schools.

State nutrition officials we interviewed suggested opportunities for a federal role in facilitating the use of USDA Foods in Schools commodities in a national emergency. For example, they suggested that USDA evaluate the food and menu items that would be needed in an emergency situation, identify vendors offering those items, and allow increased flexibility in timing of orders.[245]

Loss of revenue for local meal operators. In March 2021, we reported that a drop in revenue from meals served and an increase in program costs had caused financial challenges for local meal operators. In April 2021, FNS officials noted that the decline in meals served had been especially pronounced in spring 2020, when many institutions that provide meals—schools, child care centers, and day care homes—were closed. Helping offset these financial losses, in December 2020 the Consolidated Appropriations Act, 2021 was enacted, which provided additional funding for reimbursements for meals served in spring 2020.[246] Officials from three of the four state child nutrition programs cited challenges related to the process for receiving funding approval from FNS, noting that the information required was difficult or time consuming to compile.[247]

One state nutrition official we interviewed noted that CACFP institutions, such as child care centers, were especially in need of this funding because, unlike schools, they were less likely to have other sources of funding to compensate in the short term. Officials from the National CACFP Sponsors Association noted that some child care centers and day care homes, especially smaller providers, had to close before the funding became available.

Waiver rollout and extensions. As we reported in March 2021, nutrition officials in nearly all the districts where we conducted interviews found the waivers helpful in providing needed flexibilities to serve meals during the pandemic. However, they, along with officials from state child nutrition agencies and anti-hunger organizations in all four states, identified challenges related to the rollout of waivers. These challenges included the timing of waiver announcements and extensions, interpreting the waivers, delays in waiver-related guidance documents, and keeping up with the number of waivers announced.

State and local officials said that dealing with such challenges exhausted their financial and staff resources and made it difficult to plan for meal service and communicate accurate information to families. Officials from the Boys and Girls Clubs of America said that implementation of waivers was confusing for many of their clubs that operate under both SFSP and CACFP At-Risk because waivers were not always consistent across programs.

FNS officials told us they are examining potential policy changes, including identifying authority or legislative action that FNS may need to help prepare for future national emergencies. Additionally, officials in three of the four state child nutrition agencies and two of the FNS regional offices suggested that establishing a single emergency child nutrition feeding program or plan could help streamline the waiver implementation process and reduce the burdens on states and school district nutrition programs.

Potential to make some flexibilities permanent. Officials of some districts and states told us they believed that some of the child nutrition flexibilities provided during the pandemic should be made permanent. For example, officials from two state nutrition offices suggested that FNS should assess whether there are opportunities to expand off-site monitoring because of the cost and time savings. In June 2021, FNS officials told us that FNS is gathering information through the SMO study with the intent of assessing whether any flexibilities could be made permanent.

Methodology

To conduct our work, we reviewed relevant federal laws and agency guidance and documents. We also reviewed the most recent data available from FNS on meals served through child nutrition programs. To assess the reliability of these data, we reviewed existing information about the data and FNS’s reporting processes, interviewed agency officials, and conducted manual testing of the data. We determined the data were sufficiently reliable for our purposes.

We also interviewed officials from FNS’s National Office and four of its regional offices. Additionally, we interviewed state nutrition directors and officials representing anti-hunger organizations from four states—Georgia, Maine, Texas, and Washington, which we selected in part on the basis of variation in geographic location and school operating policies at the time of selection—as well as district nutrition officials from three school districts in each state. Further, we interviewed officials from the Boys and Girls Clubs of America, the National CACFP Association, and the School Nutrition Association to gain additional perspectives on feeding children in and outside school settings. The information gathered from these interviews is intended to provide examples of experiences of meal operators, states, FNS officials, and nutrition organizations during the COVID-19 pandemic and is not intended to be representative.

Agency Comments

We provided FNS and the Office of Management and Budget with a draft of this enclosure. FNS provided technical comments, which we incorporated as appropriate. Although it did not provide a formal letter, FNS stated in it technical comments that it generally concurred with our recommendation. FNS also said that the COVID-19 pandemic may continue to affect Child Nutrition program operations.

FNS stated that it is developing a plan to interview every state agency to determine how they used waivers to operate and administer all Child Nutrition programs during the COVID-19 pandemic. According to FNS, it will evaluate the information it collects to capture crucial information, lessons learned, and best practices to inform future policy making. FNS also stated that in fiscal year 2022 it will gather information from stakeholders at conferences to obtain perspectives of key stakeholders such as CACFP institutions and nonschool SFSP sponsors.

We are encouraged by FNS’s plans to gather local perspectives directly from such stakeholders. Given the various efforts FNS is planning, we believe that now is an appropriate time to document the agency’s plans to analyze lessons learned during the pandemic.

GAO’s Ongoing Work

Our work on FNS’s response to COVID-19 through its nutrition assistance programs, including child nutrition, is ongoing. We will continue to examine FNS’s use of COVID-19 relief funds, its efforts to ensure program integrity, and its efforts to help vulnerable populations access the programs.

Related GAO Products

Federal Real Property Security: Interagency Security Committee Should Implement A Lessons-Learned Process. GAO-12-901. Washington, D.C.: September 10, 2012.

Grants Management: OMB Should Collect and Share Lessons Learned from Use of COVID-19-Related Grant Flexibilities. GAO-21-318. Washington, D.C.: March 31, 2021.

Standards for Internal Control in the Federal Government. GAO-14-704G. Washington, D.C.: September 2014.

Summer Meals: Actions Needed to Improve Participation Estimates and Address Program Challenges. GAO-18-369. Washington, D.C.: May 31, 2018.

Contact Information: Kathryn A. Larin, (202) 512-7215 or larink@gao.gov

Unemployment Insurance Programs

Although fewer weekly claims for regular and CARES Act unemployment insurance benefits were submitted during summer 2021 than earlier in the pandemic, millions of unemployed workers continued to claim the CARES Act benefits until those programs ended in early September. The historic numbers of claims during the pandemic contributed to challenges—such as delayed benefit payments and increased amounts of overpayments—that have implications for future crises.

Entity involved: Department of Labor

Background

The unemployment insurance (UI) system is a federal–state partnership that provides temporary financial assistance to eligible workers who become unemployed through no fault of their own. States design and administer their own UI programs within federal parameters, and the Department of Labor (DOL) oversees states’ compliance with federal requirements, such as by ensuring that states pay benefits when they are due. Regular UI benefits—those provided under the state UI programs in place before the CARES Act was enacted—are funded primarily through state taxes levied on employers and are intended to typically be lower than a claimant’s previous employment earnings, according to DOL.[248]

The CARES Act created three federally funded temporary UI programs that expanded benefit eligibility and enhanced benefits, which were amended by the Consolidated Appropriations Act, 2021 and the American Rescue Plan Act of 2021.[249] These programs expired on September 6, 2021, although some states ended their participation before that date.
  1. Pandemic Unemployment Assistance (PUA) authorized UI benefits for individuals not otherwise eligible for UI benefits, such as self-employed and certain gig economy workers, who were unable to work as a result of specified COVID-19-related reasons.[250]
  2. Federal Pandemic Unemployment Compensation (FPUC) generally authorized an additional weekly benefit for individuals who were eligible for weekly benefits under the regular UI and CARES Act UI programs.[251]
  3. Pandemic Emergency Unemployment Compensation (PEUC) generally authorized additional weeks of UI benefits for those who had exhausted their regular UI benefits.[252]

In addition, the Consolidated Appropriations Act, 2021 created the Mixed Earner Unemployment Compensation (MEUC) program, which was extended by the American Rescue Plan Act of 2021.[253] According to DOL, the MEUC program was intended to cover regular UI claimants whose benefits do not account for significant self-employment income and who thus may have received a lower regular UI benefit than they would have received had they been eligible for PUA.[254]

During the pandemic, regular UI claimants who exhausted their regular UI and PEUC benefits in certain states also had access to the Extended Benefits program. The program, which existed before the pandemic and provides up to an additional 13 or 20 weeks of benefits, is activated in states during periods of high unemployment, according to DOL.[255]

Overview of Key Issues

About half of the states stopped participating in at least one CARES Act UI program before the programs expired in September 2021. As of August 17, 2021, 26 states had announced their intention to terminate participation in at least one of these programs.[256] For example, according to DOL, all 26 of these states notified DOL that they intended to end participation in the FPUC program, and 22 notified DOL that they also intended to end participation in the PEUC and PUA programs.[257] Of these 26 states, 24 proceeded to terminate their participation in these programs between mid-June and late July, according to DOL.[258] For the week ending on June 12, 2021, DOL reported that 1.8 million continued claims for PUA and PEUC benefits were submitted in states that proceeded to terminate these programs over the next several weeks. This suggests that demand for these benefits likely would have continued if these states had not ended their participation.[259]

In public announcements, states generally cited labor shortages among their reasons for withdrawing from the CARES Act UI programs. However, preliminary data from DOL’s Bureau of Labor Statistics (BLS) do not show an association between termination of participation in these programs and reductions in states’ unemployment rates.[260] Also, initial results from our review of the economic literature suggest that expanded UI benefits during the pandemic generally did not discourage unemployed workers from returning to work; however, this conclusion could shift over time with changes in economic conditions.[261]

In July 2021, DOL issued guidance to states regarding their responsibilities after they stopped participating in the CARES Act UI programs or after the programs expired, whichever came first.[262] For example, states must process and pay PUA, FPUC, PEUC, and MEUC benefits to eligible claimants for all weeks of unemployment before the programs ended. In addition, for 30 days after the PUA program ended, states were required to continue accepting new PUA applications for weeks of unemployment before the program ended. States were also required to accept new PEUC and MEUC applications for weeks of unemployment before those programs ended, if state law allowed claims to be backdated.

In August 2021, the Secretary of the Treasury and the Secretary of Labor issued a joint letter to Congress affirming that states can use American Rescue Plan Act of 2021 funding to provide additional weeks of UI benefits to workers whose benefits expired in September and to workers who are not covered by the regular UI program.

Although claims for UI benefits were generally lower during summer 2021, overall demand for benefits remained high through early September. During the week ending on September 25, 2021, DOL reported that 298,255 initial claims for regular UI benefits were submitted nationwide, which was close to the lowest number since the surge of initial claims at the beginning of the pandemic.[263] DOL reported that more than 100,000 initial claims for PUA benefits were submitted nationwide during each week in August 2021; the PUA program expired on September 6.[264]

Despite the overall decline in initial claims since the beginning of the pandemic, initial claims throughout summer 2021 remained at a level that indicated more Americans were continuing to experience job losses than was typical in the year before the pandemic.[265] For example, the number of initial claims for regular UI benefits submitted each week from late June through late September ranged from about 55 percent to more than 100 percent higher than the number of initial claims submitted during the corresponding weeks in 2019.

According to DOL officials, the number of continued claims may be a better measure of continuing demand for benefits than the number of initial claims. For example, states and territories reported that during the week ending on September 11, 2021, about 2.5 million continued claims were submitted for regular UI benefits and 431,340 continued claims were submitted for Extended Benefits.[266]

The number of regular UI continued claims submitted each week declined overall after the peak in late April and early May 2020 through September 2021 (see figure). Although some of this decline was due to claimants’ finding employment, the decline was also likely due to other factors, such as claimants’ exhausting regular UI benefits and beginning to claim PEUC or other benefits.[267] For example, the persistently high numbers of PEUC continued claims from fall 2020 through the program’s expiration in early September 2021 suggest that many individuals were experiencing long-term unemployment and had likely exhausted their regular UI benefits.[268]

Weekly Continued Claims Submitted Nationwide for Regular Unemployment Insurance, Pandemic Emergency Unemployment Compensation, and Extended Benefits, Mar. 1, 2020–Sept. 4, 2021

Note: After exhausting regular UI benefits—generally available for up to 26 weeks in most states, according to the Department of Labor (DOL)—eligible individuals were generally able to apply for (1) PEUC and then (2) the Extended Benefits program, if activated in a state. The weekly counts of continued claims shown are not seasonally adjusted. Counts are from DOL data that include any adjustments submitted by states as of September 30, 2021. All 53 states and territories reported regular UI claims in each week shown. The number of states and territories reporting PEUC claims varied by week; for example, fewer than half of the states and territories reported data before mid-May 2020 and at least 50 states and territories reported data each week from mid-July 2020 through mid-June 2021, when certain states began terminating their PEUC programs. The number of states reporting Extended Benefits claims each week varied, partly on the basis of the number of states with the program activated each week. The Extended Benefits program, which existed before the pandemic, is activated in states during periods of high unemployment, according to DOL.

During the week ending on September 4, 2021, before the pandemic UI programs expired on September 6, states and territories reported about 8.5 million continued claims submitted in the PUA and PEUC programs. This large number of claims, in addition to the approximately 2.4 million regular UI continued claims submitted that same week, suggests that demand for unemployment benefits remained high as the CARES Act UI programs expired. During the week ending on September 4, 2021, regular UI continued claims were about 81 percent lower than in the corresponding week of 2020 but were about 62 percent higher than in the corresponding week of 2019, before the pandemic.

As we have previously reported, because of backlogs in processing historic numbers of claims in many states, among other data issues, the number of continued claims did not approximate the number of individuals claiming benefits during the pandemic. For example, backlogs in claims processing led to individuals submitting claims for multiple weeks of benefits in a single reporting period, which states counted as multiple claims for that reporting period, particularly in the PUA program. As a result, reliable conclusions about trends in the number of individuals claiming benefits cannot be drawn from data on continued claims.

Although the timeliness of regular UI first payments improved through early 2021, it has generally declined since April 2021, and some claimants still face substantial delays in receiving benefits. The timeliness of first payments of regular UI benefits declined substantially early in the pandemic, as states faced extensive claims-processing backlogs resulting from historically high numbers of claims.[269] As we have previously reported, first-payment timeliness nationwide improved from fall 2020 through January 2021. Subsequently, regular UI first-payment timeliness nationwide fluctuated from February through April 2021, then generally declined through August 2021.[270] First-payment timeliness was about 23 percentage points lower in August than in January 2021 (see figure).

Timeliness of First Payments of Regular Unemployment Insurance (UI) Benefits, Jan. 2020–Aug. 2021

Note: We analyzed UI first-payment timeliness data that states had reported to the Department of Labor (DOL) as of September 27, 2021. At that point, 52 of the 53 states and territories had reported data for August 2021 and all 53 had reported data for July 2021 and prior months. One of DOL’s core performance measures is the percentage of all regular UI first payments made within either 14 or 21 days of the first week of benefits for which claimants are eligible, depending on whether the state requires that individuals who are otherwise eligible for benefits serve a waiting period—generally 1 week—before receiving benefits. We focus on payments made within 21 days because in guidance released at the start of the pandemic, DOL recommended that states consider temporarily waiving their waiting week requirements. According to DOL, states must pay at least 87 percent of regular UI claims within 14 or 21 days to reach an acceptable level of performance.

According to DOL officials, when they asked officials in some states about the reasons for the decrease in timeliness in May and June 2021, they cited the additional time and effort needed to process backlogs of claims needing adjudication and appeals, decreased numbers of staff, and enhanced fraud prevention efforts that have resulted in more adjudication issues for states to resolve. In some states, many regular UI claimants continue to face delays before receiving their first payments. For example, in 16 states, at least half of regular UI claimants who received their first benefits in August 2021 had been waiting longer than 3 weeks. In addition, nationwide, about 21.7 percent of regular UI claimants who received their first benefits in August 2021 had been waiting longer than 10 weeks. By comparison, of the regular UI claimants nationwide who received their first benefits in March 2020, less than 3 percent had been waiting longer than 3 weeks and less than 1 percent longer than 10 weeks.

The number of states holding federal loans to pay UI benefits, and the total amount of these loans, decreased slightly in late summer 2021.[271] Because of persistently high numbers of UI claims during the pandemic, some states have held substantial federal loans to pay UI benefits. As of September 24, 2021, 12 states and territories held federal loans totaling about $45.3 billion. This total loan balance is approximately $8.2 billion less than we reported in July 2021, and seven states that previously held these loans have repaid them.[272]

As we have previously reported, some states have used their Coronavirus Relief Fund payments, under guidance from the Department of the Treasury, to pay for UI benefits in order to reduce or prevent loan balances and avoid possible future increases in employer tax rates.[273] Generally, if a federal loan balance to pay UI benefits is held by a state for 2 or more years, the rate of the federal tax on employers that is used to fund the UI program will increase.[274] States may continue to use these Coronavirus Relief Fund payments for expenses through the end of 2021.[275] In addition, the American Rescue Plan Act of 2021 provided funds to states, local governments, territories, and tribal governments. States and territories may use these funds, under an interim final rule from the Department of the Treasury, to restore their UI trust funds or to repay federal loan balances.[276]

States have continued to identify overpayments in the regular UI and CARES Act UI programs, and 30 states are reporting data to DOL on recovered PUA overpayments. DOL reported that as of September 27, 2021, states and territories had identified approximately $18.3 billion in overpayments made in UI programs during the first 5 quarters of the pandemic combined (April 2020 through June 2021).[277] These reported overpayments are not necessarily a result of fraud, though some may be.[278] This $18.3 billion in reported overpayments includes
  • $6.3 billion in FPUC overpayments,[279]
  • $6.0 billion in PUA overpayments,[280]
  • $5.4 billion in regular UI and Extended Benefits overpayments, and
  • $0.7 billion in PEUC overpayments.[281]

States and territories may waive and not recover overpayments in certain circumstances.[282] States and territories reported waiving about $0.2 billion of regular UI, Extended Benefits, PEUC, and FPUC overpayments during the first 5 quarters of the pandemic combined (April 2020 through June 2021).[283] In response to a recommendation in our March 2021 report, DOL updated state reporting requirements for the PUA program in September 2021 to include the collection of data on waived PUA overpayments.[284]

In late May 2021, DOL’s Office of Inspector General (OIG) reported, among other things, that some states did not perform required overpayment recovery activities.[285] Specifically, DOL’s OIG found that 19 states (38 percent) did not perform the required overpayment recovery activities, such as benefit offsets, for the recipients to repay the UI overpayments.[286] The OIG further reported that once states identify overpayments, it is essential that they complete recovery activities to mitigate the risk of financial loss as a result of overpaid claims.[287] The OIG recommended that DOL assist states with reporting of claims, overpayments, and fraud to create clear and accurate information and then use the overpayment and fraud reporting to prioritize and assist states with fraud detection and recovery. DOL agreed with the OIG’s recommendation and said it would take steps to implement the recommendation.

When states and territories recover overpayments, they report the recovered amount in the period when the recovery occurs. For example, states and territories reported recovering about $0.4 billion in the PEUC and FPUC programs combined from April 2020 through June 2021 (i.e., during the first 5 quarters those programs existed).[288] In response to a recommendation in our January 2021 report, DOL updated its state reporting requirements for the PUA program to include the collection of data on recovered PUA overpayments. As of September 27, 2021, 30 states had reported some data on recovered PUA overpayments, reporting a combined total of about $0.3 billion recovered from April 2020 through June 2021.[289]

Because of the limited number of states and territories that had reported data on recovered and waived PUA overpayments to DOL as of September 27, 2021, our related recommendations remained open. Sustained reporting by more states is needed to help inform DOL, policymakers, and the public about the amount of PUA overpayments that states have waived and recovered and about the amount that remains outstanding.

States and territories also report the amounts of fraud overpayments—a subset of the total overpayment amounts.[290] During the first 5 quarters of the pandemic combined (April 2020 through June 2021), states and territories reported about $1.5 billion in overpayments they had identified as fraud across the UI programs.[291] However, according to DOL, states do not report these overpayments as fraud until investigations are complete and fraud has been confirmed, which may take a long time. As a result, states’ and territories’ ongoing investigations into whether overpayments were due to fraud could contribute to increasing amounts of fraud overpayments reported in the coming months. For example, four of the 47 states and territories that had reported PUA overpayments as of September 27, 2021, had not yet reported any fraud overpayments.

In addition to reporting overpayments they identify under program requirements, states conduct independent assessments of representative samples of paid and denied claims of permanent UI programs to determine the accuracy of UI benefit payments and estimate the amount and rate of improper payments.[292] According to DOL, by conducting these assessments, states can develop and implement corrective actions if the assessments identify improper payments, including potentially fraudulent payments.[293] For fiscal year 2020, DOL allowed states to suspend these assessments for 3 months to enable the states to reassign staff to address increased claims volume.[294] According to DOL officials, the methodology for fiscal year 2020, including the 3-month suspension, was approved by the Office of Management and Budget (OMB) and complied with OMB guidance.[295]

Additionally, as we reported in November 2020, DOL made the decision not to include claims filed exclusively under the CARES Act UI programs in its existing program for estimating improper payments.[296] According to DOL officials, because PUA has unique and distinct eligibility requirements, applying the improper payment methodology for the regular UI program would not be appropriate. We also reported that DOL planned to conduct an improper payment risk assessment after the first year of each CARES Act UI program’s operations.[297]

In July 2021, DOL officials told us that they were actively planning to conduct an improper payment risk assessment in accordance with OMB guidance and to then develop improper payment estimates for CARES Act UI programs.[298] Officials also said that DOL had formed a working group to develop new sampling and investigative methodologies to estimate improper payments for the PUA program and that DOL planned to extrapolate regular UI data to the PEUC program.[299] DOL officials stated that they anticipated the new improper payment estimates would be included in DOL’s fiscal year 2022 agency financial report. We have previously reported that the identification of improper payments could suggest that a program is vulnerable to fraud; however, it is important to note that fraud is a specific type of improper payment and that improper payment estimates are not intended to measure fraud in a particular program.

For more information about fraud risks in the UI programs, DOL’s efforts to address potential fraud, and the extent to which DOL has comprehensively assessed fraud risks, see the enclosure on Unemployment Insurance Fraud Risk Management in appendix I.

Methodology

To conduct this work, we analyzed regularly reported DOL data for calendar years 2019, 2020, and 2021, having obtained the most recent data on September 30, 2021. We reviewed relevant federal laws, DOL guidance, and DOL OIG reports. We interviewed DOL officials about program data and agency actions; we also interviewed DOL OIG officials and National Association of State Workforce Agencies staff. In addition, we reviewed data file documentation and written responses from DOL officials. Further, we interviewed DOL officials about the UI database, PUA claims data files, and data on outstanding federal loans to pay UI benefits, specifically related to state-reported data on claims counts, overpayments, payment timeliness, and loan balance amounts. We examined the data for outliers, missing values, and errors. We determined that the DOL data we used were sufficiently reliable for the purposes of this report.

Agency Comments

We provided DOL and OMB with a draft of this enclosure. DOL provided technical comments on this enclosure, which we incorporated as appropriate. OMB did not provide any comments.

GAO’s Ongoing Work

We continue to examine the implementation and administration of CARES Act UI programs and the implications of high claims volumes during the pandemic on the timeliness of benefit payments and on overall program integrity. We are conducting additional work to examine selected claimants’ experiences during the pandemic and experiences with accessing CARES Act UI programs. We are also continuing to analyze selected states’ data on PUA benefit receipt, by race and ethnicity, as part of our ongoing work on the PUA program. In addition, we are examining programmatic risks and challenges for the UI program as well as options for program transformation.

GAO’s Prior Recommendations

The table below presents our recommendations on UI programs from prior bimonthly CARES Act reports.
Prior GAO Recommendations Related to Unemployment Insurance (UI) Programs

Recommendation

Status

The Secretary of Labor should ensure the Office of Unemployment Insurance collects data from states on the amount of overpayments waived in the Pandemic Unemployment Assistance (PUA) program, similar to the regular UI program (March 2021 report).

Open—partially addressed. The Department of Labor (DOL) agreed with our recommendation and on September 3, 2021, issued PUA program guidance and updated instructions for states to report PUA overpayments waived. As of September 27, 2021, this recommendation remained open, as PUA data were not yet available for September 2021. We will continue to monitor state reporting of PUA overpayments waived.

The Secretary of Labor should ensure the Office of Unemployment Insurance collects data from states on the amount of overpayments recovered in the PUA program, similar to the regular UI program (January 2021 report).

Open—partially addressed. DOL agreed with our recommendation and on January 8, 2021, issued PUA program guidance and updated instructions for states to report PUA overpayments recovered. As of September 27, 2021, only 30 states had begun reporting some data on the amount of PUA overpayments recovered. Sustained reporting by more states is needed to help inform DOL, policymakers, and the public about the amount of PUA overpayments states have recovered. We will continue to monitor state reporting of PUA overpayment recovery data.

The Secretary of Labor should ensure the Office of Unemployment Insurance pursues options to report the actual number of distinct individuals claiming benefits, such as by collecting these already available data from states, starting from January 2020 onward (November 2020 report).

Open—partially addressed. DOL partially agreed with our recommendation. Specifically, DOL agreed to pursue options to report the actual number of distinct individuals claiming UI benefits. However, DOL did not agree with the recommended retroactive effective date of the reporting. In a letter dated March 30, 2021, DOL stated that it had begun developing a new state report that would capture data related to distinct individuals claiming regular UI benefits; DOL estimated that this data collection might begin in early 2022. DOL also reiterated its concerns about the feasibility of states’ reporting this information retroactively, including for the pandemic UI programs, without detracting from their primary obligation for timely and accurate claims processing.

We maintain that DOL should pursue options to report the actual number of distinct individuals claiming UI benefits, retroactive to January 2020. Even if the information is unavailable for some time, these data are vital to understanding how many individuals received UI benefits as well as the size of the population supported by the UI system during the pandemic. Given the substantial investment in UI programs during the pandemic, an accurate accounting of the size of the population supported by this funding may be critical to understanding the efficiency and effectiveness of the nation’s response to unemployment during the pandemic. An accurate accounting may also be critical to helping DOL and policy makers identify lessons learned about the administration and use of regular and expanded UI benefit programs.

In August 2021, DOL officials said their work on the new state report that would capture data related to distinct individuals claiming regular UI benefits had been delayed by other competing priorities related to implementing the American Rescue Plan Act of 2021. The officials said that in spite of this delay, they hoped to complete the report by early 2022.

The Secretary of Labor should ensure the Office of Unemployment Insurance revises its weekly news releases to clarify that in the current unemployment environment, the numbers it reports for weeks of unemployment claimed do not accurately estimate the number of unique individuals claiming benefits (November 2020 report).

Closed—addressed. DOL’s weekly news release of December 10, 2020, clarified that the numbers reported for weeks of UI benefits claimed do not represent the number of unique individuals claiming benefits.

The Secretary of Labor should, in consultation with the Small Business Administration (SBA) and the Department of the Treasury, immediately provide information to state unemployment agencies that specifically addresses SBA's Paycheck Protection Program (PPP) loans, and the risk of improper payments associated with these loans (June 2020 report).

Closed—addressed. DOL issued guidance on August 12, 2020, clarifying that individuals working full time and being paid through PPP are not eligible for UI. The guidance also clarified that individuals working part time and being paid through PPP would be subject to certain state policies, including state policies on partial unemployment, to determine their eligibility for UI benefits. Further, the guidance clarified that individuals being paid through PPP but not performing any services would similarly be subject to certain provisions of state law. Finally, the guidance noted that an individual receiving full compensation would be ineligible for UI.
Source: GAO. I GAO-22-105051

Related GAO Products

Management Report: Preliminary Information on Potential Racial and Ethnic Disparities in the Receipt of Unemployment Insurance Benefits during the COVID-19 Pandemic. GAO-21-599R. Washington, D.C.: June 17, 2021.

Contact information: Thomas M. Costa, (202) 512-7215, costat@gao.gov

Unemployment Insurance Fraud Risk Management

The amount of fraudulent and potentially fraudulent activity in unemployment insurance programs increased substantially after the three CARES Act temporary expansions, relative to the amount of such activity in the regular unemployment insurance program before the pandemic. Improper payments have also been a long-standing concern in the regular unemployment insurance program, suggesting the program may be vulnerable to fraud. The Department of Labor continues to identify and implement strategies to address potential unemployment insurance fraud and has ongoing program integrity activities to identify risks. However, it has not comprehensively assessed fraud risks in alignment with leading practices identified in GAO’s Fraud Risk Framework, which by law must be incorporated in guidelines established by the Office of Management and Budget for agencies.

Entity involved: Department of Labor

Recommendations for Executive Action

The Secretary of Labor should designate a dedicated entity and document its responsibilities for managing the process of assessing fraud risks to the unemployment insurance program, consistent with leading practices as provided in our Fraud Risk Framework. This entity should have, among other things, clearly defined and documented responsibilities and authority for managing fraud risk assessments and for facilitating communication among stakeholders regarding fraud-related issues.

The Secretary of Labor should identify inherent fraud risks facing the unemployment insurance program.

The Secretary of Labor should assess the likelihood and impact of inherent fraud risks facing the unemployment insurance program.

The Secretary of Labor should determine fraud risk tolerance for the unemployment insurance program.

The Secretary of Labor should examine the suitability of existing fraud controls in the unemployment insurance program and prioritize residual fraud risks.

The Secretary of Labor should document the fraud risk profile for the unemployment insurance program.

The Department of Labor neither agreed nor disagreed with our recommendation to designate a dedicated entity for managing the process for assessing fraud risks within the unemployment insurance program. The department stated that its Chief Financial Officer and the Employment and Training Administration’s Assistant Secretary are responsible for risk assessment and management in the UI program. However, it is important that, consistent with our Fraud Risk Framework, the Department of Labor clearly document this designation and these officials’ antifraud responsibilities.

The Department of Labor neither agreed nor disagreed with our other five recommendations. The department stated that its current process allows it to identify, evaluate, and manage risks. However, the department also said it will incorporate the recommended practices and approaches moving forward.

Background

The unemployment insurance (UI) system is a federal–state partnership that provides temporary financial assistance to eligible workers who become unemployed through no fault of their own. States design and administer their own UI programs within federal parameters, and the Department of Labor (DOL) oversees states’ compliance with federal requirements, such as by ensuring states pay benefits when they are due. Regular UI benefits—those provided under the state UI programs in place before the CARES Act was enacted—are funded primarily through state taxes levied on employers and are intended to typically be lower than a claimant’s previous employment earnings, according to DOL.[300]

The CARES Act created three federally funded temporary UI programs that expanded benefit eligibility and enhanced benefits, which were amended by the Consolidated Appropriations Act, 2021 and the American Rescue Plan Act of 2021.[301] These programs expired on September 6, 2021, although some states ended their participation before that date.
  1. Pandemic Unemployment Assistance (PUA) authorized UI benefits for individuals not otherwise eligible for UI benefits, such as self-employed and certain gig economy workers, who were unable to work as a result of specified COVID-19-related reasons.[302]
  2. Federal Pandemic Unemployment Compensation (FPUC) generally authorized an additional weekly benefit for individuals who were eligible for weekly benefits under the regular UI and CARES Act UI programs.[303]
  3. Pandemic Emergency Unemployment Compensation (PEUC) generally authorized additional weeks of UI benefits for those who had exhausted their regular UI benefits.[304]

In addition, the Consolidated Appropriations Act, 2021 created the Mixed Earner Unemployment Compensation (MEUC) program, which was extended by the American Rescue Plan Act of 2021.[305] According to DOL, the MEUC program was intended to cover regular UI claimants whose benefits do not account for significant self-employment income and who thus may have received a lower regular UI benefit than the benefit they would have received had they been eligible for PUA.[306]

See the enclosure on Unemployment Insurance Programs in appendix I for additional background information.

Federal and state entities continue to investigate and report on high levels of fraud, potential fraud, and fraud risks in the UI programs.[307] At the federal level, DOL’s Office of Inspector General (OIG) and the Department of Justice (DOJ) continue to investigate potential UI fraud and highlight the level of fraud, potential fraud, and fraud risks in the UI programs. As of July 14, 2021, DOL OIG officials reported that they had opened more than 21,000 complaints and investigations involving alleged UI fraud since the pandemic began. The DOL OIG last reported that it had identified and recovered more than $160 million in UI fraud, according to the DOL OIG’s website.

DOL OIG efforts have also identified billions of dollars in potential UI fraud under investigation. In June 2021, DOL’s OIG reported that it had identified nearly $8 billion of potentially fraudulent UI benefits paid from March 2020 through October 2020.[308]

In addition, since March 2020, DOJ has publicly announced charges in numerous fraud-related cases related to the UI programs. Specifically, from March 2020 through July 2021, 71 individuals pleaded guilty to federal charges of defrauding UI programs and federal charges were pending against 192 individuals.[309] See the enclosure on Federal Fraud-Related Cases in appendix I for more information about DOJ charges.

Several state auditors have also reported on fraud, potential fraud, and fraud risks in the UI programs. For example, state auditors in California, Louisiana, and Kansas identified millions of dollars in potentially fraudulent payments.[310]

Overview of Key Issues

Our review of DOL OIG reports, state audits, and DOJ cases identified several fraud risks in UI programs. On the basis of our review of DOL OIG reports, state audit reports, and DOJ cases, we identified the following fraud risks in UI programs:[311]
  • Applicants’ falsifying information on income or employment eligibility to receive benefits. For example, an individual who pleaded guilty to falsely reporting income information to receive UI benefits, including the additional $600 available through FPUC, obtained more than $13,000 in fraudulent benefits.
  • Applicants’ using stolen identities or personally identifiable information (PII) to apply for benefits or receive benefits. For example, an individual who pleaded guilty to filing fraudulent UI claims used the stolen identities of dozens of individuals to obtain more than $500,000.
  • Applicants’ applying for, or receiving, benefits by using fake identity information. For example, an individual who pleaded guilty to applying for UI benefits by using a fake Social Security number obtained an unspecified amount of fraudulent benefits.
  • Applicants’ submitting fraudulent claims or erroneously receiving benefits in multiple states. For example, an individual who pleaded guilty to applying for, and in many cases receiving, UI benefits from state administrators in at least 40 different states and the District of Columbia obtained approximately $350,000 in fraudulent benefits.
  • Prison inmates’ applying for benefits for which they were not eligible. For example, in a coordinated scheme, three individuals—two of whom have pleaded guilty—collected PII and filed fraudulent claims on behalf of more than 35 co-conspirators who were ineligible for benefits, including 15 incarcerated individuals. Using co-conspirators’ PII, the three individuals filed 37 fraudulent claims that resulted in payment of at least $499,000 in benefits.
  • Current or former federal or state or territory employees’ misusing their positions to fraudulently obtain benefits for themselves or others. For example, a former territory employee pleaded guilty to federal program theft and accessing a protected computer in furtherance of fraud in connection with a scheme to defraud UI. He filed for pandemic-related unemployment benefits on his own behalf, falsely claiming that he was unemployed and eligible. In addition, he used his position as a customer service representative to submit fraudulent UI claims on behalf of others, and he directed the benefits from these fraudulent claims into a bank account he controlled. This individual obtained, or attempted to obtain, a total of $93,000 in benefits. He was sentenced to 10 months imprisonment followed by 3 years of supervised release and was ordered to pay more than $14,000 in restitution.

The amount of fraudulent and potentially fraudulent activity in UI programs increased substantially after the three CARES Act temporary expansions, relative to the amount of such activity in the regular UI program before the pandemic. The high benefit payment amounts offered during the pandemic created a significant financial incentive for fraudsters to target the UI program, according to officials from the National Association of State Workforce Agencies (NASWA).[312] In addition, DOL officials stated that the CARES Act UI programs are a key target for fraud because fraudsters can receive a large amount of money in one payment.

DOL, DOL OIG, and NASWA have identified factors that contribute to fraud risk in the UI programs. Information about fraud schemes in a program is a useful source for understanding fraud risks. According to DOL officials, fraud in the regular UI program has historically involved a misrepresentation of eligibility, such as an employee’s failing to report returning to work, failing to report earned wages, or failing to fulfill work search requirements or an employer’s failing to report a reason for separation. Officials stated that although DOL was aware of isolated occurrences of identity-related fraud before the pandemic, such as the use of false identities, it has seen an increase in the frequency and volume of identity-related fraud, as well as significantly more sophisticated fraud schemes, since the pandemic began.

According to DOL officials, the department is aware of fraud risks in CARES Act UI programs, particularly risks of fraudulent claim schemes and of fraudulent individual claims for benefits. In its fiscal year 2020 agency financial report, DOL acknowledged an increase in suspected fraudulent activity—specifically, organized fraud schemes targeting the CARES Act UI program.[313] Moreover, according to NASWA officials, the UI system has faced unrelenting attacks by foreign organized crime groups during the pandemic. According to DOL officials, the most common fraud schemes during the pandemic have included the use of stolen PII to file a claim or multiple claims; the use of synthetic identities (i.e., real identities mixed with fictitious information); and the use of bot attacks in attempts to overwhelm state UI systems or launch phishing schemes to obtain individual PII to perpetrate future fraud.[314]

DOL officials also told us that they have observed the use of new fraud schemes targeting CARES Act UI programs.
  • Hijacking of bank accounts. After an individual submits a legitimate application for UI benefits and provides bank account information for the funds’ direct deposit, a fraudster will hack into the applicant’s UI system account and reroute the deposit from the applicant’s bank account to a bank account the fraudster can access.
  • Mimicking of state UI websites. When people conduct Internet searches for their state’s UI office, they may find, and file claims on, a fraudulent website that looks like the state workforce agency’s website, thus providing their PII to fraudsters.

Factors contributing to fraud risk include conditions or actions that are most likely to cause or increase the possibility of fraud. Through our review of DOL OIG reports, state audit reports, and DOJ cases, we identified the following fraud risk factors in CARES Act UI programs:[315]
  • Reliance on self-certification. The CARES Act allowed PUA applicants to self-certify their eligibility and did not require them to provide any documentation of self-employment or prior income. In October 2020, DOL’s OIG reported that states cited the PUA self-certification requirement as a top fraud vulnerability.[316] We have previously reported that relying on program participants to self-report and self-certify information on agency forms, instead of verifying such information independently, could cause an agency to miss opportunities to prevent program fraud and abuse. To help address this risk, the Consolidated Appropriations Act, 2021, enacted in December 2020, included a requirement for individuals to submit documentation of employment or self-employment when applying for PUA.[317]
  • Waiver of waiting period. During the pandemic, states were encouraged to process and pay claims quickly while experiencing a historic number of claims. In an effort to speed claims processing, DOL encouraged states to temporarily suspend the existing waiting period for benefits and the CARES Act provided full federal funding for the first week of regular UI benefits to states that did so. According to DOL officials, under the regular UI program, DOL allows states to take up to 21 days to make the first payment of benefits, giving them time to detect potential fraud. Waiving the waiting period meant that some states had less time to employ tools for fraud prevention and detection, according to NASWA officials.
  • Low staffing levels and antiquated IT systems. In the beginning of the pandemic, outdated IT systems and low staffing levels made it difficult for many states to efficiently process the unprecedentedly high volume of claims and conduct internal control activities, according to DOL OIG officials. These officials also told us that state agency staffing levels are determined on the basis of claim volume levels in previous years. At the start of the pandemic, many state UI programs had been experiencing their lowest claims volume, and thus their lowest staffing and funding levels, since the 1970s. To process the high volume of claims after the pandemic began, many states reassigned benefit payment control staff to claims processing, with the result that few staff were working to prevent and detect fraud, according to DOL OIG officials. Additionally, DOL OIG officials stated that some state IT systems were not equipped to handle the volume of claims and some may not have been easily compatible with the NASWA UI Integrity Center’s Integrity Data Hub resources.[318]
  • Variation in data analysis across states. States’ use of data mining, cross matching, and identity verification resources varies. According to DOL officials, the department does not have authority to require states use the databases available in the UI Integrity Center’s Integrity Data Hub, such as the Identify Verification or Multi-State Cross Match databases. Additionally, not all states were able to cross-match claims with federal incarceration data and many states did not have access to state-level incarceration data.

DOL continues to identify and implement strategies to address potential fraud in the UI programs. DOL has taken steps to prevent and detect fraud in UI programs, including the CARES Act UI programs. In its fiscal year 2020 agency financial report, DOL highlighted a number of these steps, including (1) working with states and DOL’s OIG to employ data mining and data analytics to detect fraud when a claim is filed, (2) holding routine conference calls with DOL’s OIG and states to discuss and share information on UI fraud schemes, and (3) establishing training.

In May 2020, DOL began issuing specific fraud prevention and detection guidance in response to the challenges faced by state workforce agencies and the increase in suspected fraud, encouraging states to continue to uphold the integrity of the UI programs and to use the resources provided through the NASWA UI Integrity Center, including the Integrity Data Hub.[319] In addition, the guidance highlighted states’ responsibilities to perform required cross-matches to prevent potential fraud.[320] The UI Integrity Center also provides a fraud-alert application to facilitate information sharing about fraud schemes between states and the DOL OIG. According to DOL officials, the department continues to invest in the Integrity Data Hub to enhance cross-matching functionality and ensure states have access to key fraud detection services. Officials said that key investments include the Multi-State Cross-match, the Identity Verification solution, and Account Verification Services.

Also, as we have previously reported, DOL made two allotments of $100 million available to states, in September 2020 and January 2021, respectively, to address potential fraud and identity theft in the PUA and PEUC programs.[321] According to DOL, states have reported using the funds from the January 2021 allotment to, among other things, hire additional data analytic and fraud investigator staff, hire third-party vendors to conduct fraud risk and cybersecurity assessments of states’ UI systems, subscribe to identity verification and identity proofing solutions, and coordinate with finance departments and law enforcement to aid in the recovery of overpaid benefits. States also reported using this funding to make updates to their systems, including purchasing fraud prevention software, fraud detection software, and data mining tools. In addition, states reported enhancing their UI systems by implementing multifactor authentication, automating claim validation, and creating portals for individuals to report fraud.[322]

The American Rescue Plan Act of 2021 provided DOL with $2 billion to combat potential fraud, among other things.