The Office of Management and Budget (OMB) announced Tuesday that the Obama administration has decreased improper payments by $17.6 billion dollars in 2011.
The recent cuts included those paid for Medicare, Medicaid, Pell Grants and Food Stamps.
The government-wide error rate for Medicare and Medicaid dropped to 4.7 percent, down from the 2010 error rate of 5.3 percent and the 2009 error rate of 5.42 percent, according to the OMB. Also, the Medicare fee-for-service error rate fell from 9.1 percent in 2010 to 8.6 percent in 2011.
In 2010, the federal government spent $125 billion on improper payments made due to fraud, error and checks sent to deceased people and prisoners.
OMB Director Jack Lew said the cuts are due to the effective and agressive use of technology. In 2010, the president announced that by the end of 2012, the Administration would avoid $50 billion in improper payments, cut Medicare fee-for-service errors in half, and recapture $2 billion in overpayments to contractors. The Administration is on track to meet or exceed those goals, the OMB said.
"Today we have shown real progress in cutting waste, fraud and abuse, but we still need Congress to act on the president's proposal," said Department of Health and Human Services Secretary Kathleen Sebelius."Until Congress acts, we will continue doing everything in our power to save money on behalf of the American people."
Sebelius said HHS would launch four additional pilots to reduce the error rate and cut Medicare and Medicaid waste and fraud. These include:
• Expanding the use of Recovery Audit Contractors. The agency will now allow private companies to screen certain hospital payments before they are made, which will prevent improper Medicare payments from happening in the first place.
• Testing changes to outdated hospital billing systems to help prevent over-billing. Hospitals sometimes perform services as inpatient that Medicare requires to be outpatient. Right now, when those hospitals bill Medicare, HHS does not allow them to re-bill as outpatient. Under this pilot, HHS will allow some claims that are incorrectly made under the inpatient program to be resubmitted under the outpatient program. This mistake – incorrect billing of services – is a leading cause of error in the Medicare program and wastes time and money in appeals.
• Changing the process for approving payments for medical equipment with high error rates. One contributor to the Medicare improper payment rate is incorrect reimbursement for medical equipment that is not medically necessary. This change will allow HHS to pilot a new process for reviewing these medical equipment claims before they are made, thus helping to reduce Medicare improper payments.
• Working with states to improve fraud detection. HHS is initiating a pilot project under the Partnership Fund for Program Integrity Innovation to test an automated tool to screen providers for the risk of fraud. Currently, HHS and states lack standardized Medicaid provider data, which hampers detection of potential fraud. If successful, this tool will not only help prevent improper payments by weeding out fraudulent providers, but it will help States focus their resources where fraud is most likely to occur.