Issues

Improper Payments Across Government Agencies Hit 124.7 Billion in 2014

Medicare, Medicaid among programs blamed for $19 billion increase

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Improper payments across federal government agencies are estimated to have hit $124.7 billion last year, according to a new government report.

The Government Accountability Office (GAO) released a report Thursday addressing improper payments made by 124 programs across 22 government agencies, actions that are considered a pervasive government-wide issue. The watchdog estimates that such improper payments throughout the federal agencies totaled $124.7 billion in fiscal year 2014, an increase of nearly $19 billion from fiscal year 2013.

"The federal government continues to face an unsustainable long-term fiscal path. Changing this path will require difficult fiscal policy decisions to alter both long-term federal spending and revenue," the report states. "In the near term, executive branch agencies and Congress can take action to improve the government’s fiscal position by addressing two long-standing issues—improper payments and the tax gap. Over time, these issues involve amounts near or exceeding $1 trillion."

According to the GAO, the significant increase of improper payments between fiscal years 2013 and 2014 is mainly attributed to Medicare, Medicaid, and Earned Income Tax programs. These three areas accounted for 75 percent of all improper payments, with Medicare-related programs responsible for $59.9 billion (48 percent) in improper payments as the Earned Income Tax Credit added $17.7 billion (14.2 percent). Additionally, Medicaid contributed $17.5 billion (17.5 percent) in such payments while all other government programs accounted for $29.6 billion (23.7 percent).

The amount federal agencies have made in improper payments has drastically increased over the past decade, according to data within the report.

During fiscal year 2003, when the GAO first began tracking such figures, it was estimated that improper payments totaled $35 billion. This figure is $89.7 billion less than last year’s $124.7 billion—the highest on record.

The root causes of improper payments were said to stem from administrative and documentation errors, authentication, and medical necessity errors, verification errors, and fraud.

Despite the increased focus on improper payments by government watchdogs, the GAO says that some federal agencies make it difficult to fully assess the problem, as incomplete or underestimated totals are sometimes provided while other agencies do not comply with criteria listed in federal law.

"For example, for fiscal year 2014, 2 federal agencies did not report improper payment estimates for 4 risk-susceptible programs, and 5 programs with improper payment estimates greater than $1 billion were noncompliant with federal requirements for 3 consecutive years," GAO writes. "Identifying root causes of improper payments can help agencies target corrective actions, and GAO has made numerous recommendations that could help reduce improper payments."