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Feds Made Over $125 Billion In Improper Payments Last Year

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Federal agencies made over 5 billion in improper payments in Fiscal Year 2010, which represents a 15 percent increase over the previous year, according to a new report by the Government Accountability Office.

Such improper payments include overpayments, underpayments and payments that were not adequately documented. The tally is "not intended to be an estimate of fraud in federal agencies' programs and activities," notes the GAO, which has been studying improper payments for seven years.

Per the GAO:

Agencies cited a number of causes for the estimated 5.4 billion in reported improper payments, including insufficient documentation, incorrect computations, changes in program requirements, and in some cases fraud.

The programs with the highest number of improper payments were:

  • Medicare Fee-for-Service: .3 billion due to medically unnecessary services and insufficient documentation.
  • Medicaid: .5 billion due to insufficient or no documentation provided for conducting medical reviews and cases that were either ineligible or their eligibility status could not be determined.
  • Unemployment Insurance: .5 billion due to eligibility errors, errors in handling separation issues and claimants who have returned to work and can continue to claim benefits.
  • Earned Income Tax Credit: .9 billion due to high turnover of eligible claimants, confusion among eligible claimants, complexity of the law, structure of the program, unscrupulous return preparers and fraud.

The GAO notes, in conclusion, how relevant this issue is to the current budget crisis:

In closing, given the pressures resulting from today’s fiscal environment, the need to ensure that federal dollars are spent as intended is critical. While the increase in government-wide improper payment estimates is alarming, federal agencies’ efforts to more comprehensively report on estimated improper payments represent a positive step to improve transparency over the full magnitude of federal improper payments for which corrective actions are necessary. With more federal dollars flowing into risk-susceptible programs, establishing effective accountability measures to prevent and reduce improper payments, and to recover overpayments, becomes an even higher priority.

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