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Senate hearing addresses Medicare and Medicaid overpayments

Expert testimony from the GAO shows that federal health programs contributed $77.4 billion in estimated overpayments

The federal government spent an estimated $124.7 billion in 2014 in improper payments across 22 government agencies, most of which came from Medicare and Medicaid programs, according to expert testimony from a senior official at the Government Accountability Office (GAO).

Gene L. Dodaro, comptroller general of the United States testified before the U.S. Senate Committee on Finance on Thursday that the estimate increased $19 billion from the previous year, thanks to three programs responsible for three-quarters of estimated improper payments. The Earned Income Tax Program accounted for approximately $17.7 billion of that total, while Medicare and Medicaid accounted for $77.4 billion. Both healthcare programs have been stalwarts on the GAO's list of federal programs at high risk of fraud, waste and abuse.

"The Medicare program, which provides essential health coverage to elderly and disabled beneficiaries, paid out nearly $60 billion in improper payments in FY 2014," Senate Finance Committee Chairman Orrin Hatch (R-Utah) said in prepared remarks. "That's nearly half of all the improper payments across the entire government and roughly 10 percent of all paid Medicare benefits. That's right, about one out of every 10 dollars paid out of Medicare was paid in error. That is unacceptable."

In his testimony, Dodaro identified five actions the Centers for Medicare & Medicaid Services (CMS) could take to reduce the high volume of improper payments, including:

  • Improved use of automated edits (limited use of edits saved Medicare $1.76 billion in 2010)
  • Monitoring post-payment claims reviews
  • Removing Social Security numbers from Medicare cards (CMS started an initiative to remove numbers in July 2015)
  • Implementing actions in the Patient Protection and Affordable Care Act (PPACA), such as requiring surety bonds for certain at-risk providers
  • Strengthening verification of providers and suppliers (a previous report identified 22 percent of providers and suppliers had potentially ineligible addresses)

For Medicaid, Dodaro suggested CMS take the following actions:

  • Improve third-party liability efforts
  • Increase oversight of managed care
  • Strengthen program integrity

In prepared remarks, Sen. Ron Wyden (D-Ore.), a ranking member of the Senate Committee on Finance, pointed to the Audit and Appeal Fairness, Integrity, and Reforms in Medicare (AFIRM) Act, passed by the Committee in June, which aims to reduce the backlog of appeals and cut down on improper payments through the use of audits.

Previously, the GAO has called on CMS to do more to prevent millions of improper payments that come from Medicaid. In August, the GAO released a report identifying four key issues facing Medicaid as it enters its 50th year, including high improper payment rates and insufficient oversight.

For more:
- Watch the Senate Committee on Finance hearing
- Here's the GAO testimony
- Read Sen. Hatch's prepared remarks
- Read Sen. Wyden's prepared remarks

Related stories:
Improper payments among the four key issues facing Medicaid
GAO to Congress: CMS needs to do more to prevent Medicaid fraud
Medicare, Medicaid improper payments top $75B in 2014
Medicare physician enrollment screening overlooks questionable addresses, license reviews
GAO adds VA to list of programs at high risk of fraud, waste and abuse