As I’ve written before, improper payments are payments made in the wrong amounts, to the wrong person, or for the wrong reason. In 2009, improper payments totaled $98 billion, with $54 billion stemming from Medicare and Medicaid. We cannot afford – nor should we tolerate – this waste of taxpayer dollars.
That’s why today the President announced a new effort to improve accountability through the use of payment recapture audits. Payment recapture audits are investigations in which specialized private sector auditors use cutting-edge technology and tools to scrutinize government payments and then find and reclaim taxpayer funds made in error or gained through fraud. These auditors can be compensated based on the amount of improper payments they identify that are then reclaimed – providing a powerful incentive to find every error.
From 2005 to 2008, Medicare tested this idea in a pilot program in three large states – California, New York, and Texas. The result? $900 million recaptured for taxpayers.
Currently, using reclaimed funds to pay for recapture audits is only possible for Medicare Fee-for-Service program payments and for government contracts at the 20 out of 24 major government agencies that do more than $500 million each year in government contracting. This leaves out contract payments made by numerous other agencies as well as grants and other forms of federal benefit payments made to organizations such as state and local governments, colleges and universities, banks, and non-profit organizations.
To expand the use of payment recapture audits, the President today signed a presidential memorandum directing all federal departments and agencies to expand and intensify their use of payment recapture audits under the authority they currently have. It is anticipated that using the payment recapture audits will return at least $2 billion over the next three years to American taxpayers – double the current amount of projected recovered costs. In addition, the President announced his support for the bipartisan Improper Payments Elimination and Recovery Act, which would expand the ability of agencies to fund these specialized audits with recaptured payments. Fittingly, this legislation is co-sponsored by Claire McCaskill, who now serves in Truman’s Senate seat.
These actions are part of a broader initiative to reduce the amount of improper payments, and a larger effort to cut down on waste and fraud in the federal government. From investments in and proposals related to Medicare, Medicaid, and CHIP program integrity which are estimated to save taxpayers $23 billion over the next decade to our contracting reform plans, we are committed to streamlining government operations and cutting what is ineffective, duplicative, or unnecessary.
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