Washington, DC ? Senate Governmental Affairs Committee Chairman Fred Thompson (R-TN) today released a General Accounting Office Report he requested which identifies $19.1 billion in improper payments in just 14 programs administered by nine federal agencies in Fiscal Year 1998 alone. Chairman Thompson announced he has written Office of Management and Budget Director Jack Lew urging OMB to take steps to slash the improper payments.
?As alarming as these figures are, they?re just the tip of the iceberg. They don?t come close to capturing the full extent of the federal government?s improper payments,? said Senator Thompson, noting the figures identified by the GAO represent only the nine agencies that voluntarily compile such figures. ?Even more disturbing is the fact that the Administration is doing little to address the problem. There?s no good reason to believe that billions more won?t be lost to improper payments next year. I think the taxpayers — the people funding these programs — expect and deserve some accountability.?
Senator Thompson wrote in his letter to Director Lew, ?Although I requested this GAO report last May, I thought it particularly useful now as we discuss the efficacy of a .97 percent across-the-board cut in discretionary spending. Such a cut represents $3.6 billion in budget outlays. I hope that OMB would realize that we could save many times $3.6 billion with just a modicum of effort and accountability.?
Thompson said that improper payments result from a variety of causes ranging from bureaucratic errors to outright fraud. For example, a health care provider bills the Health Care Financing Administration (HCFA) for services provided under Medicare. HCFA may pay the provider twice, or more than the provider is entitled to. Among the improper payments identified by GAO are:
- Medicare Fee-for-Service ($12.6 billion)
- Supplemental Security Income ($1.6 billion)
- Food Stamps ($1.4 billion)
- Old Age and Survivors Insurance ($1.2 billion)
- Disability Insurance ($941 million)
- Housing Subsidies ($857 million)
- Veterans Benefits, Unemployment Insurance, and others ($514 million)
The Senator urged the OMB Director to adopt the GAO recommendations and issue the guidelines necessary to require all agencies to (1) estimate and report improper payments and (2) develop goals and strategies for improving programs in which improper payments are made. # # #
- The GAO report and a copy of Senator Thompson?s letter to OMB Director Lew are attached.
The Honorable Jacob J. Lew
Office of Management and Budget
Old Executive Office Building
Washington, DC 20503
Dear Director Lew:
The General Accounting Office has just reported to me that the financial statement reports for nine agencies disclose $19.1 billion in improper payments for major programs that they administer for fiscal year 1998 alone, and it is clear from GAO?s analysis that this is just the tip of the iceberg. Most disturbing is that the Administration is doing little to solve the problem. The improper payments that GAO analyzed include:
- Medicare Fee-for-Service ($12.6 billion);
- Supplemental Security Income ($1.648 billion);
- Food Stamps ($1.425 billion);
- Old Age and Survivors Insurance ($1.154 billion);
- Disability Insurance ($941 million);
- Housing subsidies ($857 million); and
- Veterans Benefits, Unemployment Insurance, and others ($514 million).
Alarming as these figures are, they don?t come close to capturing the full extent of the federal government?s overpayments. Federal agencies are not even required to identify or report on their overpayment levels. Indeed, the GAO review only looked at those programs (most involving mandatory spending) for which agencies voluntarily include overpayment estimates in their financial statements. According to GAO, its audits and those by inspectors general show that overpayments are ?much greater? than agencies have disclosed thus far. In its report, GAO wrote that ?the full extent of the government?s improper payments is not known . . . [i]mproper payments are much greater than have been disclosed thus far in agency financial statement reports.? GAO identified programs in the Defense and Education Departments as well as the Internal Revenue Service as among those that have serious overpayment problems that these agencies have not even reported.
Our Committee?s analysis confirms that the problem is much greater than reported. By adding up just a few documented audit findings, the Committee recently came up with a total of $210.5 billion in taxpayer dollars lost through waste, fraud, and abuse, including overpayments. This figure includes $1.2 billion in Supplemental Security Income overpayments made in FY 1998. It also includes $4.6 billion in defense contract overpayments that contractors voluntarily returned to DOD over a five-year period.
I am concerned that the Administration is doing too little to ensure that these improper payments will not continue to grow next year. As you know from the letters I recently sent to the heads of all major agencies, I continue to be concerned that agencies are not setting goals and measures under the Government Performance and Results Act to solve problems like improper payments. As GAO reported to me: ?For nine [of the programs we analyzed], the respective agencies did not comprehensively address improper payments in their [performance] plans. Improper payments were not addressed at all for the remaining four programs.? Such lack of attention to the management tools granted to agencies is an abdication of agencies? statutory responsibility under the Results Act to move toward performance-based management.
Disclosing overpayment levels and then undertaking specific and measurable performance commitments to reduce them provides the discipline and incentive agencies need to take these problems seriously. The progress of the Health Care Financing Administration (HCFA) in reducing Medicare overpayments proves this point. While Medicare overpayments are still much too high, they have dropped by almost one half since HCFA began disclosing estimated overpayment levels in its financial statements and adopting specific overpayment reduction goals in its Results Act performance plans.
Although I requested this GAO report last May, I thought it particularly useful now as we discuss the efficacy of a .97 percent across-the-board cut in discretionary spending. Such a cut represents $3.6 billion in budget outlays. I hope that OMB would realize that we could save many times $3.6 billion with just a modicum of effort and accountability. I urge you to adopt the recommendations made in this GAO report, which I know you have had the opportunity to review, and issue the guidance necessary to require agencies to (1) estimate and report improper payments and (2) develop goals and strategies for improving programs in which improper payments are made. We will work with you to that end.
If you have any questions regarding the information provided in this letter, please don?t hesitate to contact me directly.