Improper Medicare-Medicaid Payments Up 20%; $77.4B in FY14

By Terence P. Jeffrey | March 17, 2015 | 11:16am EDT

( - Medicare and Medicaid made a combined $77.4 billion in improper payments in fiscal 2014, a 20.4 percent increase from fiscal 2013, according to data published by the Government Accountability Office and the federal website.

In fiscal 2013, Medicare and Medicaid made 64.3 billion in improper payments, according to the website.

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The $77.4 billion in improper payments that Medicare and Medicaid made in fiscal 2014 made up about 62.07 percent of the $124.7 billion total in improper payments for the year reported by the GAO.

The 64.3 billion in improper payments the Medicare and Medicaid made in fiscal 2013 made up about 60.8 percent of the $105.8 billion improper payments for that year.

In a statement presented to the Senate Homeland Security and Government Affairs Committee yesterday, the GAO listed the 12 government programs that made the largest amount in improper payments in fiscal 2014. Three of the top four were Medicare or Medicaid programs.

The Top 12 programs for improper payments in FY 2014 were:

1-Medicare Fee-for-Service, $45.754 billion

2-Earned Income Tax Credit, $17.7 billion

3-Medicaid, $17.492 billion

4-Medicare Advantage (Part C), $12.229 billion

5-Unemployment Insurance, $5.604 billion

6-Supplemental Security Income, $5.107 billion

7-Old Age, Survivors, and Disability Insurance, $3.0 billion

8-Supplemental Nutrition Assistance Program, $2.437 billion

9-Medicare Prescription Drug (Part D), $1.931 billion

10-School Lunch, $1.748 billion

11-Direct Loan, $1.532 billion

12-Public Housing/Rental Assistance, $1.029

In this list of the top twelve government programs by the value of their improper payments in fiscal 2014, three of the top four--and four of the top ten--are Medicare or Medicaid programs.

The website has posted historical improper payment data for all four of the health care programs (Medicare Fee-for-Service, Medicaid, Medicare Part C, and Medicare Part D) listed among this year’s Top 12 for improper payments going back to fiscal 2011. In 2013, the combined improper payments from these program was lower than it had been in 2011. In fiscal 2011, the four programs made a combined $64.8 billion in improper payments. In fiscal 2012, they made a combined total of 63.5 billion in improper payments. And, in 2013, they made a combined total of 64.3 billion in improper payments.

The increase was largely driven by Medicare Fee-for-Service improper payments, which climbed from $36.0 billion in fiscal 2013 to $45.754 billion in fiscal 2014.

Medicaid improper payments climbed from $14.4 billion in fiscal 2013 to $17.492 billion in fiscal 2014.

Medicare Advantage (Part C) improper payments climbed from $11.8 billion in fiscal 2013 to $12.229 billion in fiscal 2014.

The Medicare Prescription Drug Benefit (Part D) dropped from $2.1 billion in fiscal 2013 to $1.931 billion in fiscal 2014.

Federal agencies are required by federal law to report improper payments, but a federal "improper payment" is not necessarily an overpayment or one made to someone not entitled to receive it.

“An improper payment is defined by statute as any payment that should not have been made or that was made in an incorrect amount (including overpayments and underpayments) under statutory, contractual, administrative, or other legally applicable requirements," said the GAO statement released yesterday. "It includes any payment to an ineligible recipient, any payment for an ineligible good or service, any duplicate payment, any payment for a good or service not received (except such payments where authorized by law), and any payment that does not account for credit for applicable discounts. Office of Management and Budget guidance also instructs agencies to report as improper payments any payments for which insufficient or no documentation was found.”

Although underpayments are counted as an "improper payment" they are far outweighted by overpayments. In fiscal 2013, according to there were $97 billion in overpayments and $9 billion in underpayments.

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