Improper payments by federal government top $100B

Tax credits for families that don't qualify. Medicare payments for treatments that might not be necessary. Unemployment benefits for people who are secretly working. Federal agencies reported making $100 billion in payments last year to people who may not have been entitled to receive them.
AP Wire
Jul 13, 2014


Congressional investigators say the figure could be even higher.

"The amounts here are absolutely staggering," said Rep. John Mica, R-Fla. "It's over $100 billion each of the last five years. That's a staggering half a trillion dollars in improper payments."

Mica chairs the House Oversight government operations subcommittee, which held a hearing on improper payments Wednesday.

Each year, federal agencies are required to estimate the amount of improper payments they issue. They include overpayments, underpayments, payments to the wrong recipient and payments that were made without proper documentation.

Some improper payments are the result of fraud, while others are unintentional, caused by clerical errors or mistakes in awarding benefits without proper verification.

In 2013, federal agencies made $97 billion in overpayments, according to agency estimates. Underpayments totaled $9 billion. That adds up to $106 billion in improper payments, or 3.5 percent of all the payments made by the federal government.

The Obama administration has reduced the amount of improper payments since they peaked at $121 billion in 2010. The administration has stepped up efforts to measure improper payments, identify the cause and develop plans to reduce them, said Beth Cobert, deputy director of the White House budget office.

Federal agencies recovered more than $22 billion in overpayments last year, she said.

"We have taken an aggressive approach to attacking waste, fraud and abuse within federal agencies, and we will continue to seek out new and innovative tools to help us in this fight," Cobert told the subcommittee.

However, a new report by the Government Accountability Office questions the accuracy of agency estimates, suggesting that the real tally could be higher. The GAO is the investigative arm of Congress.

"The federal government is unable to determine the full extent to which improper payments occur and reasonably assure that appropriate actions are taken to reduce them," Beryl H. Davis, director of financial management at the GAO, told the subcommittee.

Davis said some agencies don't develop estimates for programs that could be susceptible to improper payments. She also said estimates by the Defense Department "may not be reliable."

The Pentagon estimates that less than 1 percent of its payments are improper. However, the GAO found last year that the Pentagon's estimates for 2011 "were neither reliable nor statistically valid because of long-standing and pervasive financial management weaknesses."

"We have reason to believe that the numbers are sound but we certainly understand why the skepticism exists," Mark E. Easton, the Defense Department's deputy chief financial officer, told the subcommittee.

"I hope you won't stand too strongly behind your numbers," Rep. Gerald Connolly, D-Va., replied.

The largest sources of improper payments are government health care programs, according to agency estimates. Medicare's various health insurance programs for older Americans accounted for $50 billion in improper payments in the 2013 budget year, far exceeding any other program.

Most of the payments were deemed improper because they were issued without proper documentation, said Shantanu Agrawal, a deputy administrator for the Centers for Medicare & Medicaid Services. In some cases, the paperwork didn't verify that services were medically necessary.

"Payments deemed 'improper' under these circumstances tend to be the result of documentation and coding errors made by the provider as opposed to payments made for inappropriate claims," Agrawal told the subcommittee.

Among other programs with large amounts of improper payments:

—The earned income tax credit, which provides payments to the working poor in the form of tax refunds. Last year, improper payments totaled $14.5 billion. That's 24 percent of all payments under the program.

"It's an unacceptable rate of improper payments, an unacceptable rate of dollars out the door, and we need to do whatever we can to make a dent in it," IRS Commissioner John Koskinen told the subcommittee.

The tax credit is one of the largest anti-poverty programs in the U.S., providing $60.3 billion in payments last year. Eligibility depends on income and family size, making it complicated to apply for the credit — and difficult to enforce — Koskinen said.

People get credits they don't deserve by claiming children they don't have or misreporting their income or filing status, Koskinen said.

The IRS prides itself on issuing most tax refunds most within three weeks, often before the agency gets wage and other financial information from employers and banks. To combat fraud, the IRS has asked Congress to make employers and banks submit this information more quickly. The IRS also wants more authority to correct errors on tax returns without doing a full audit.

— Medicaid, the government health care program for the poor. Last year, improper payments totaled $14.4 billion.

Medicaid, which is run jointly by the federal government and the states, has seen a steady decline in improper payments since 2010, when they peaked at $23 billion.

The program is expanding under President Barack Obama's health law.

—Unemployment insurance, a joint federal-state program that provides temporary benefits to laid-off workers. Amount of improper payments last year: $6.2 billion, or 9 percent of all payments under the program.

The Labor Department said most overpayments went to people who continued to get benefits after returning to work, or who didn't meet state requirements to look for work while they were unemployed. Others were ineligible for benefits because they voluntarily quit their jobs or were fired.




But, But, we need to borrow the money to pay for Obama's lawlessness giving amnesty to illegal aliens - so the government can waste more of our hard earned tax dollars. Go Figure.

And note, since it is the AP, they don't focus on the fact that the high water mark for improper payments in 2010 was achieved by Obama himself.

Michael Johnson

We get it. They're just as bad as multi-billion dollar corporations. Oh, wait...they are controlled by multi-billion dollar corporations. That's what you get when you have an oligarchy.


Thanks Obama!!!!!!!!!!!!


Here is a good website with charts that shows the steady decrease in improper payments from 2009-2013. This has been an enormous, wide-net effort that has saved taxpayers billions.

Barry Soetoro

Only to have it all wasted by those pesky Republicans shutting down the government. I heard it was up to 126 billion. That's just what I heard.


That's just fine, Barry....go with whatever you heard. No point in letting substantiated facts muddy the waters, especially on the peskyR ranch.


Notice the start at the bottom, people with Social Security, Medicare for un-needed procedures, not at the top ?


100 Billion in waste is still a huge number and is in part why the resentment for paying more taxes has swelled in the last few years and when gas locally hits $4.00 a gallon no matter who is in office at the top it's hard to stomach Washington acting as though 100 Billion tossed into a black hole is a good number when here in the “real world” filling your tank makes you wince, that and a visit to the grocery store plus paying bills and most of us have little to nothing to put into our cookie jars.
Would our Vets still be dying for lack of a Dr. visit if we took the money from the black hole and put it toward caring for those we promised to care for? What more could be done for the poor and hungry everywhere with 100 Billion dollars you didn't have before, you could give everyone in America the money to pay off their mortgage and still have money left over. Washington has been famous for waste and apathy through lots of administrations, this one is no different and the angst is we’ve accepted it as the norm and keep electing the same people over and over expecting a different result. It’s the Bee Movie on parade “this time this time this time”.


This is outrageous! Where is the accountability? Surely they can figure out who is receiving what, or maybe they can't because the hand outs have become so overwhelming. Our nation is in so much trouble, its becoming frightening.

Lack of leadership, Lack of following the laws of the land, and the entitlement mentality is weakening our country to depths unknown.


Obamacare has taken historic steps towards combating health care fraud, waste and abuse by providing critical new tools to crack down on entities and individuals attempting to defraud Medicare and Medicaid. For example:

* The Health Care Fraud & Abuse Control Program has returned $10.7 billion to the medicare Trust fund since the beginning of the Obama administration in 2009 through 2013. (which was of course wiped out by the Republican shut-down in October 2013, which cost the taxpayers $24 billion+).

* Individuals charged with criminal Medicare/Medicaid fraud has increased 75% from 797 in 2008 to 1,430 in 2011. (sorta like the 2 million mostly criminal illegal immigrant deportations under Obama).

Barry Soetoro

24 billion then. Just trying to help...


You'll notice I put a (+) after it in recognition of your much-appreciated contribution. I mean, what's a 100 billion here and there.....comme ci comme ca.....


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