White House reports billions lost in improper payments for Medicare, other government programs

Nov 18 2009

The White House announced Tuesday that billions of federal dollars were spent in improper payments in 2009 and that spending in the Medicare and Medicaid programs accounted for more than half of that total. President Barack Obama will issue an executive order to crack down on the problem, officials said.

CNN: "The federal government made $98 billion in improper payments in fiscal 2009. ... [The] total for improper payments -- from outright fraud to misdirected reimbursements due to factors such as an illegible doctor's signature -- was a 37.5 percent increase over the $72 billion in 2008, according to figures provided by Peter Orszag, director of the White House Office of Management and Budget."

"In an evening media briefing, Orszag was unable to provide an overall figure for what percentage of the bad payments was due to fraud. He also lacked a breakdown on how much of the total improper payments involved spending on Obama's $787 billion economic recovery package passed in February. ... The increase in the total over the previous year was due in part to improved detection through stricter and expanded accounting methods, Orszag said. ... Overall, improper payments for the Medicare fee-for-service program and the Medicare Advantage accounted for $36 billion, or more than a third of the 2009 total. Obama and Democratic leaders say that wiping out waste and fraud in Medicare, including the elimination of more than $100 billion in government subsidies for the Medicare Advantage program in which private insurers supplement standard Medicare coverage, will reduce government health care costs by several hundred billion dollars" (Cohen, 11/18). 

Modern Healthcare: "Medicare and Medicaid improperly paid out $54.2 billion in fiscal 2009, with the rate of Medicare fee-for-service errors more than doubling over the previous year, White House's budget chief Peter Orszag said. ... CMS is reporting a 2009 fee-for-service error rate of 7.8%, or $24.1 billion, compared with 3.6% in 2008. ... A development that Orszag described as 'perhaps more troubling' was that the error rate in Medicare Advantage claims jumped to 15.4% from 10.6% with no changes in methodology, resulting in $12 billion in improper payments in fiscal 2009" (Blesch, 11/17). 

The Associated Press reports Obama "is expected to sign an executive order within the next week aimed at cracking down on government waste and fraud, particularly in Medicare and other benefit programs. In the 2009 report, the government officially reported questionable Medicare payments of roughly $36 billion, but that amount will be revised upward to about $48 billion next year as the Health and Human Services Department fully converts to a new methodology that imposes stricter documentation requirements. Under the executive order, every federal agency would have to maintain a Web site that tracks improper payments, error rates and outstanding payments. If an agency doesn't meet targets for reducing error rates for two years in a row, the agency director and responsible official will have to directly report to OMB to explain the delinquency and new actions they will take" (Yen, 11/18).