crossposted from unbossed
That is the conclusion of GAO in a new report issued this past week. FYI, $72 billion is about 4% of the $1.8 trillion of reported government outlays and according to GAO is a significant increase of about $23 billion from FY 2007. The Improper Payments Information Act of 2002 (IPIA) requires executive branch agency heads to identify programs and activities that are susceptible to significant improper payments.
The fiscal year 2008 total improper payment estimate of $72 billion reported for fiscal year 2008 did not include any estimate for ten programs — including the Medicare Prescription Drug Benefit program — with fiscal year 2008 outlays totaling about $61 billion that were identified as susceptible to significant improper payments. . . Medicare and Medicaid comprise 50 percent of reported governmentwide improper payments in fiscal year 2008. HHS reported improper payment amounts of $10.4 billion in Medicare Fee-for-Service and $6.8 billion in Medicare Advantage. HHS also reported in its agency financial report that it issued its first full-year Medicaid improper payment rate estimate of 10.5 percent, or $18.6 billion for the federal share of expenditures for fiscal year 2008. This Medicaid improper payment estimate represents the largest amount that any federal agency reported for a program in fiscal year 2008.
GAO found serious problems extending over many years with improper payments at HHS, DHS, DOD, and DOT.
For example, at DOT
Department of Transportation — The OIG reported that its audits and investigations continue to find oversight and control deficiencies increasing vulnerability to improper payments, including fraud and abuse, and other ethics issues involving agency officials and contractors, including schemes related to bribery and kickbacks, bid rigging, and over-billing of labor and materials.
Among problems at Treasury are overpayments to vendors and contractors. They also include improper filings that lead to refunds that are not due. One wonders how the use of contractors to collect tax debt has played into this problem.
Another privatized part of the government, Medicare Advantage, has been another source of improper payments.
Medicare Advantage is designed to provide health coverage through private health plans for Medicare beneficiaries who choose to enroll in this option. Fiscal year 2008 marks the first year that CMS reported estimated improper payments for Medicare Advantage, with an error rate of 10.6 percent or $6.8 billion in estimated improper payments.
Other problems with Medicare include:
Medicare’s spending on home health care found that home health agencies’ practice of upcoding (overstating the severity of a beneficiary’s condition), providing kickbacks, and billing for services not rendered contributed to Medicare’s home health spending and utilization. We reported that inadequate administration of the Medicare home health benefit left the program vulnerable to improper payments. Likewise, our review of enrollment of Medicare’s durable medical equipment suppliers found weaknesses in Medicare’s screening process that exposed the program to potentially paying millions of dollars for medical equipment and supplies that were not necessary or were not provided to beneficiaries.
In . . light of the current fiscal stress and looming deficits, the need to ensure that every federal dollar is spent as intended has never been more important. With more federal dollars flowing into risk-susceptible programs, establishing effective accountability measures is critical. In this regard, implementing strong internal controls can serve as the front-line of defense against improper payments. Nonetheless, effectively identifying improper payments and designing and implementing actions to reduce them are not simple tasks or easily accomplished. Consequently, agencies’ efforts to fulfill the requirements of IPIA will require sustained top-level attention and commitment.
The report is Improper Payments: Progress Made but Challenges Remain in Estimating and Reducing Improper Payments GAO-09-628T, April 22, 2009