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GAO: Safety net programs account for billions in improper payments

Senate Finance Committee Chairman Orrin Hatch, R-Utah (shown here in a July 27, 2015, photo), says that only 29 percent of more than 440 GAO recommendations designed to cut waste and improper payments have been fully addressed.
Senate Finance Committee Chairman Orrin Hatch, R-Utah (shown here in a July 27, 2015, photo), says that only 29 percent of more than 440 GAO recommendations designed to cut waste and improper payments have been fully addressed. AP

Three health and safety net programs for the poor and elderly accounted for most of the federal government’s $124.7 billion in improper payments in fiscal 2014, the Government Accountability Office reported Thursday.

The figure, which represents improper payments across 124 federal programs, is up roughly 20 percent from $105.8 billion in fiscal 2013, according to a new GAO report.

Most of the $19 billion increase resulted from erroneous payments under the Medicare, Medicaid and Earned Income Tax Credit programs. They account for more than 75 percent of the GAO’s government-wide improper payment estimate.

Improper payments are those made in error or in an incorrect amount and can include duplicate payments, those made without proper documentation or to ineligible recipients, and payments for ineligible goods and services.

They can result from fraud, unintentional clerical errors or a host of other reasons.

Nearly $1 trillion in improper federal payments have been made since 2003, when a federal law began requiring certain agencies to report the amounts.

And despite increased government attention to the problem, “incomplete or understated estimates and noncompliance with criteria listed in federal law hinder the government’s ability to assess the full extent of improper payments and implement strategies to reduce them,” the GAO report said.

While some progress has been made to address these concerns, any successes we’ve seen have been overshadowed by a persistently growing mountain of waste, fraud, abuse and mismanagement.

Sen. Orrin Hatch, R-Utah

In testimony Thursday before the Senate Finance Committee, U.S. Comptroller General Gene Dodaro said two federal agencies didn’t report improper payment estimates for four “risk-susceptible” programs. And five other programs thought to make improper payments of more than $1 billion a year didn’t comply with federal reporting requirements for three straight years.

Committee Chairman Orrin Hatch, R-Utah, said the GAO estimated that efforts by the Obama administration and Congress to cut waste and abuse had netted $20 billion in “financial benefits,” from 2011 though 2014. But Hatch said that only 29 percent of more than 440 GAO recommendations designed to cut waste and improper payments had been “fully addressed.”

“In other words, while some progress has been made to address these concerns, any successes we’ve seen have been overshadowed by a persistently growing mountain of waste, fraud, abuse and mismanagement,” Hatch said.

Across all federal programs, the improper payment rate increased from 4 percent of program outlays in 2013 to 4.5 percent in 2014.

Programs with the highest reported error rates were the Earned Income Tax Credit at 27.2 percent, the School Breakfast Program at 25.6 percent and Farm Security and Rural Investment Act programs at 23.1 percent.

Medicare, the national health program for seniors, issued roughly $60 billion in improper payments in fiscal 2014, the GAO reported. Medicaid, the federal-state health program for the poor, paid out roughly $17.5 billion in error.

The Earned Income Tax Credit, which provides a refundable tax credit to help lift low-income individuals and families out of poverty, paid out roughly $17.7 billion in improper payments, the GAO estimated.

The oversight agency recommended that Medicare more closely monitor reviews of post-payment claims and improve systems that ensure that claims meet Medicare requirements. They also called on Medicare to remove enrollees’ Social Security numbers from their Medicare cards to reduce the risk of identity theft.

Medicaid should increase oversight of its managed-care expenditures and improve efforts to make sure that medical costs for enrollees with outside health coverage are divided accordingly.

Because eligibility for the Earned Income Tax Credit is determined by taxpayers or those who prepare their tax returns, it’s hard for the Internal Revenue Service to verify eligibility before refunds are issued. Although tax returns with EITC claims are twice as likely to be audited by the IRS, backlogs have slowed the agency’s response to taxpayer questions.

In response, the IRS has stepped up its “outreach and education to taxpayers and tax return preparers,” the report said.

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