GAO Report Describes Medicaid Improper Payments

WASHINGTON – Today, Senate Homeland Security and Governmental Affairs Committee Chairman Tom Carper (D-Del.), Ranking Member Tom Coburn (R-Okla.) and Financial and Contracting Oversight Subcommittee Chairwoman Claire McCaskill (D-MO) highlighted a report from the Government Accountability Office (GAO) entitled, “Medicaid: Enhancements Needed for Improper Payments Reporting and Related Corrective Action Monitoring.” The report reviews the effectiveness of the Center for Medicare and Medicaid Services’ (CMS) estimating of national improper payment rates for the Medicaid program. GAO found that the accuracy and methodology of the Medicaid improper payments estimate is fundamentally sound and significant improvements have been made since 2010. Despite this overall success GAO identified a few areas that need attention. The report found that state agencies often make Medicaid overpayments when beneficiaries’ eligibility statuses are not reviewed. The GAO report also points out that states and federal agencies can work together to tailor corrective action plans to improve oversight to limit this waste.

“Today’s GAO report is a promising sign that legislation Congress has passed over the past few years is making a real difference in identifying and eliminating waste in the federal government,” said Chairman Carper. “The Centers for Medicare and Medicaid Services has accomplished a key goal, and now has a system in place to identify improper payments, which is an important first step toward stopping these expensive errors. Despite these great strides, we still have work to do in curbing waste, improving transparency, and making agencies and agency leadership more accountable for better protecting the resources we entrust to them. CMS should continue to work with its state partners to limit improper payments and implement corrective action plans to improve oversight. This can be accomplished by working with states to establish a comprehensive, nationwide system that double checks eligibility, thereby preventing a large number of improper payments. Finding ways to save taxpayer dollars is an all hands on deck effort that will require federal, state and local governments to work together toward the same goal. Today’s GAO report helps draw a roadmap toward that goal.”

“In fiscal year 2011, Medicaid had the second-highest estimated improper payments of any federal program at $21.9 billion. GAO’s work outlined steps necessary to make the error rate more timely and meaningful,” said Ranking Member Coburn. “As they note, capturing an accurate reading currently takes three years-worth of data. While Congress has a responsibility to ensure the soundness of the program, bureaucrats in Washington can’t micromanage Medicaid and fix all of its problems. Improper payments are best reduced when accountability is strong, incentives are aligned, and states are leaders. I look forward to working with my colleagues to put Medicaid on a more sustainable path.”

“We’ve got to continue squeezing every possible penny of efficiency out of these programs,” said Senator Claire McCaskill, Chairman of the Subcommittee on Financial & Contracting Oversight. “Overpayments waste taxpayer dollars and contribute to our national debt—it’s great news we’re making progress on this issue and I look forward to continuing to prioritize it.”

In 2010, Congress passed and President Obama signed into law The Improper Payments Elimination and Recovery Act, which created a set of important tools to address government waste, including: requiring agencies to produce corrective action plans with targets to reduce overpayment errors; mandating all agencies that spend more than $1 million perform recovery audits on all their programs to actually recoup the overpayments; and penalizing agencies that fail to comply with current accounting and recovery laws. Following the 2010 landmark legislation, Congress passed and the President signed into law the Improper Payments Elimination and Recovery Improvement Act of 2012 that builds on the 2010 law by taking additional steps to identify and prevent improper payments made by federal agencies. In 2012, CMS estimated that the national improper payment error rate for the Medicaid program was 7.1 percent, or $19.2 billion. By identifying areas of improper payments such as these, and working to recoup overpayments, CMS is able to generate billions of dollars worth of taxpayer savings each year.