GAO, Improper Payments, and Suffering Taxpayers


Citizens Against Government Waste (CAGW) reacted with dismay to the rise in improper payments that was described during Comptroller General Gene L. Dodaro’s March 4 testimony before the Senate Budget Committee. The hearing was called to review GAO’s report on “Opportunities to Reduce Fragmentation, Overlap, Duplication, and Improper Payments and Achieve Other Financial Benefits,” which updated taxpayers on the progress (or lack thereof) in addressing more than 440 GAO recommended actions, both executive and congressional, to cut waste in government spending programs and implement efficiencies in government services, across 180 areas of concern that GAO has identified in past annual reports on overlap and  duplication.

“Opportunities to Reduce Fragmentation, Overlap, Duplication, and Improper Payments and Achieve Other Financial  Benefits”

While the GAO estimated that executive branch and congressional actions have resulted in roughly $20 billion in “financial benefits” from fiscal years (FY) 2011 through 2014, only 29 percent of GAO’s recommendations were classified as “fully addressed” as of November 2014. While some progress has been made, a mountain of waste, fraud, abuse, and mismanagement overshadows those  successes.

In particular, the report disappointingly noted that “For the first time in recent years, the government-wide improper payment estimate significantly increased—to $124.7 billion in fiscal year 2014, up from $105.8 billion in fiscal year 2013. This increase of almost $19 billion was primarily due to estimates for Medicare, Medicaid, and the Earned Income Tax Credit, which account for over 76 percent of the government-wide estimate.” The $19 billion increase in improper payments essentially wipes out the $20 billion in “financial benefits” from implemented  recommendations.

The reduction and elimination of improper payments has been a bipartisan cause. Two bills to help resolve the problem were enacted in 2010 and 2012, and President Obama promised in 2010 that the Centers for Medicare and Medicaid Services (CMS) would cut the Medicare fee-for-service improper payment rate in half by  2012.

Unfortunately, Medicare improper payment rates are going in the opposite direction, for at least two reasons. First, GAO faulted CMS for failing to make good use of the anti-waste tools it has at hand, including the full implementation of prepayment edits to catch overpayments before they are made. Second, CMS has also suspended audits under the Recovery Contract Auditing (RAC)  program.

“CMS’s mismanagement of improper payments is unnecessarily costing taxpayers money. The RAC program had returned $9.7 billion to the Medicare Trust Fund before it was cut off. The RACs have been out of commission for the past 18 months, during which Medicare improper payments have continued to rise. It is time for CMS to use every tool it has and fully restore all RAC audits immediately,” said CAGW President Tom  Schatz.

Citizens Against Government Waste is a nonpartisan, nonprofit organization dedicated to eliminating waste, fraud, mismanagement and abuse in  government.

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