Council of Inspectors General testifies on AI's role in combating government fraud

The Joint Economic Committee convened on April 10, 2025, to explore how artificial intelligence (AI) and data analytics can significantly enhance government efficiency while reducing waste, fraud, and abuse. The meeting highlighted the urgent need for innovative technologies to address longstanding issues in federal programs, particularly in benefits administration and procurement.

A key focus was on anomaly detection technology, which has proven effective in identifying unusual activities by learning normal behavior patterns. Financial institutions, such as HSBC, reported that this approach can uncover two to four times more financial crimes with a 60% reduction in false positives. This technology, alongside natural language processing and robotic process automation, can streamline compliance, enhance customer service, and reveal hidden fraud within vast amounts of data.

The discussion emphasized the potential of these technologies in benefits administration, particularly for Medicare and Medicaid. AI can swiftly identify fraudulent claims, automate eligibility verification, and optimize resource allocation, ensuring that legitimate beneficiaries receive timely services. In procurement, AI tools can flag high-risk vendors and contracts, helping to prevent financial losses before they occur.

The meeting also addressed the critical role of the Inspector General (IG) community in overseeing government operations. With a history of nearly 50 years, IGs have generated significant returns on investment through audits and investigations. However, over 14,000 unimplemented IG recommendations remain, many related to improper payments. Implementing these recommendations could greatly enhance payment integrity across federal programs.

The IG community is advocating for a permanent data analytics platform to bolster their oversight capabilities. The Pandemic Analytics Center for Excellence (PACE), established with congressional support, has already demonstrated success in identifying improper payments and fraud, recovering over $165 million for taxpayers. As the PACE is set to sunset in 2025, the IG community urges Congress to sustain its funding and capabilities.

In conclusion, the meeting underscored the pressing need for government agencies to embrace AI and data analytics to improve efficiency and accountability. The evidence from the private sector is clear: these technologies can transform government operations, ensuring that taxpayer dollars are spent wisely and effectively. The path forward requires commitment and vision from lawmakers to harness these innovations for the benefit of all Americans.