Medical Billing Blog

Improper Payments: Government Wide Estimates and Reduction Strategies

Posted by Scott Shatzman on Thu, Aug, 28, 2014 @ 08:08 AM

porkOn July 9, 2014, Beryl H. Davis, Director of Financial Management and Assurance at the U.S. Government Accountability Office presented testimony to the House Subcommittee on Government Operations on “Improper Payments- Government Wide Estimates and Reduction Strategies”.


Ms. Davis’ testimony addressed:

(1) Federal agencies’ reported estimates of improper payments,

(2) Remaining challenges in meeting current requirements to estimate and report improper payments, and
(3) Strategies for reducing improper payments.


This testimony was primarily based on GAO’s fiscal year 2013 audit of the Financial Report of the United States Government and prior GAO reports related to improper payments issued over the past 3 years.


According to Davis, in fiscal year 2013, federal agencies reported an estimated $105.8 billion in improper payments. Five of these 84 programs, Medicare Fee-for-Service, Medicaid, Medicare Advantage (Part C), Earned Income Tax Credit, and Unemployment Insurance, accounted for 78 percent of the total estimated improper payments agencies reported.


Additionally, federal agencies reported improper payment error rates for seven risk-susceptible programs—accounting for more than 50 percent of the government-wide improper payment
estimate—that exceeded 10 percent. The Medicare Fee-for-Service program was among the top seven with an error rate of 10.1 percent.


In her statement, Davis identified a number of strategies that can help agencies in reducing improper payments. First, Davis called for a more detailed analysis of the root causes of improper payments to help agencies identify and implement more effective corrective actions.


For example, she said that in its fiscal year 2013, the Department of Health and Human Services (HHS) reported diagnosis coding errors as a root cause of improper payments in its Medicaid program and cited corrective actions related to provider communication and education.


Secondly, Davis claimed that designing and implementing strong preventive controls can be a very effective tool in defending against improper payments, increasing public confidence and avoiding the difficult “pay and chase” aspects of recovering improper payments. Preventive controls involve activities such as up-front validation of eligibility through data sharing, predictive analytic tests, and training programs.


Davis highlighted the analytic technologies used by HHS’s Centers for Medicare & Medicaid Services (CMS) as examples of preventive techniques that may be useful for other programs to consider. Davis also provided an example of how important training programs can be in any effort to prevent improper payments from occurring. Her example was that in fiscal year 2013 HHS reported that it offered training through its Medicaid Integrity Institute to over 4,000 state employees and officials from fiscal years 2008 through 2013.


Finally, Davis’ urged all government agencies to implement effective detection techniques to quickly identify and recover improper payments after they have been. Detection activities include data mining and recovery audits.


Thanks to Bill Finerfrock, Matt Reiter, Lara Burt, Cassy Perkins and Carolyn Bounds for contributing this article.