The Increasing Cost of Improper Payments Made by Mediciad

17 Mar The Increasing Cost of Improper Payments Made by Mediciad

Federal agencies issued an assessed $136.7 billion in incorrect payments during fiscal year 2015, the greatest yearly tally since 2004 when agencies first began reporting data on the subject.

As in past years, the Medicare and Medicaid programs accounted for the majority of the overall total amount. Increased error rates in Medicaid during 2015 were the main offender in driving up the government-wide improper payments figure.

Expansion in Medicaid, has caused the program to reach a point which can not be sustained. Since 2013, enrollment in Medicaid has increased 25 percent. Total program expenses increased 11 percent in 2014 and federal expenditures increased an estimated 16 percent in 2015. States spend more than a fourth of their yearly budget on Medicaid.

Any initiatives to restructure Medicaid and restore financial sustainability to the program must include plans to minimize improper payments in the program. Medicaid has been on the Government Accountability Office’s (GAO) lineup of risky programs since 2003 due to its substantial improper payment rate, repeatedly ranking 2nd amongst government programs with the highest improper payment rates. Since 2008, Medicaid’s improper payment rate has averaged 8.4 percent, resulting in $161 billion worth of improper payments and accounting for more than 17 percent of all improper payments made by the federal government. Eliminating all of the waste, fraud, and abuse in simply Medicaid (presuming an ongoing improper payment rate of the current 9.8 percent) could decrease the deficit by approximately 11.4 percent, according to the Congressional Budget Office‘s most recent projections.

The substantial rate of improper payments in Medicaid is remarkable given the variety of programs and tools created to combat such waste, fraud, and abuse. However, many of the current tools are ineffective, duplicative, and/or simply not used. The majority of Medicaid’s reporting procedures intended to help prevent fraud and other improper payments are voluntary. Since reporting data consumes already-limited resources, and states have historically had minimal inducement to recover improper payments– due to the fact that for each dollar recovered, states can only keep their share of the funding (which is always less than half)– many states opt to not report. While recent changes should help overcome this disincentive, more needs to be done.

States ought to be held to a higher level of accountability and tools which show the potential to be the most effective at preventing fraud and waste before it happens should be more widely and consistently utilized.