News & Views

Payment Integrity Remains a Fiscal Concern for Federal Agencies

Improper payments – those payments that either should not have been made or were made in an incorrect amount – are still a major area of fiscal concern for the federal government.  The federal government improperly pays out billions of dollars each year, and most of it involves Medicare Fraud.

The issue of government spending is, in fact, becoming a bigger issue for debate most recently because the new Biden Administration seeks to pass significant new jobs and infrastructure legislation that will spur on much more government spending in the days ahead.

That overall issue brings us to a discussion of what the U.S. Government Accountability Office (GAO) found in a fairly recent payment integrity report.  Specifically, the report found that from 2003 to 2019, the federal government misspent $1.7 trillion. This is troubling, as it is vitally important that the American public feel secure that waste, corruption, and overspending are minimized when the government is looking to put another $3 trillion into a jobs and infrastructure bill.

Recognizing that waste, Congress passed several laws requiring annual reporting of incorrect spending and overspending, and the specific reasons for it. One of the more significant laws in that regard is the Improper Payments Elimination and Recovery Act of 2010 (IPERA).

Pursuant to that Act, on March 2, 2020, the United States Government Accountability Office (GAO) delivered its report to Congress, “PAYMENT INTEGRITY, Federal Agencies’ Estimates of FY 2019 Improper Payments.”

Background of the GAO Improper Payments Study

There are 24 federal agencies that account for over 99 percent of federal payments. The Department of Health and Human Services (HHS) is one of those agencies.  Each year, IPERA requires the inspectors general (IGs) of those agencies to report detailed information about improper payments to GAO. The IGs’ reports discuss whether their agencies have complied with six IPERA criteria.  Those criteria are as follows:

  1. Publish a financial report.
  2. Conduct a risk assessment specific to improper payments.
  3. Publish estimates of the incorrect expenditures.
  4. Prepare appropriate corrective action plans.
  5. Meet annual targets for reduction in such errors.
  6. Meet a target of less than 10 percent for gross improper payments.

GAO then takes this data from the federal agencies and prepares its annual report for Congress.

The GAO’s report is meant to cover the following:

  • Compliance of each federal agency with the six IPERA criteria.
  • Improper payments for the current year and a comparison with the prior year, with detailed information for each agency.
  • Reasons for any substantial changes between the two years.
  • Root causes for the extent of the improper payments made by the federal government.
  • Highlights of those federal agencies making significant progress, or lack of progress, in minimizing improper payments.

Highlights from the March 2020 Report

Some top level highlights … First and foremost, just in fiscal 2019, the government improperly paid monies in the amount of $175 billion.  That number represented a $24 billion increase in improper payments compared to 2018 – so not good news at all.

What is even more interesting – and relevant– is that of the $175 billion in 2019, about 69% or $121 billion of those improper payments were concentrated in only three program areas:  (i) Medicaid, (ii) Medicare, and (iii) Earned Income Tax Credit.  More specifically, improper payments in the Medicaid program amounted to 32.8% of all improper payments, which was more than the improper payments of all programs other than the three listed above.  Further, the combination of Medicare (including Medicare Fee-for-Service (Parts A and B); Medicare Advantage (Part C); and Medicare Prescription Drug (Part D)) and Medicaid accounted for 59.3% of all improper payments.  That conclusion puts the spotlight squarely on the administration of the Centers for Medicare & Medicaid Services.

If you have further questions on this or any Healthcare Fraud subject, please contact the Whistleblower Firm – Nolan Auerbach & White, LLP.  We have the experience and resources to protect healthcare fraud whistleblowers.  Contact us online, or by calling 800-372-8304 today.

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