Reducing improper payments—such as payments to ineligible recipients or duplicate payments—is critical to safeguarding federal funds.
Improper payments—payments that should not have been made or were made in the incorrect amount—have consistently been a government-wide issue despite efforts to identify their root causes and reduce them. In fact, the government still doesn’t fully understand the size of federal improper payments, partly because it doesn’t have complete, reliable, or accurate estimates.
In FY 2019, agencies across the government made an estimated $175 billion in improper payments—up from about $151 billion for FY 2018. Medicare, Medicaid, and the Earned Income Tax Credit accounted for about 69% of the $175 billion total.
- Medicare’s Fee-for-Service program paid claims for medically unnecessary services and claims that had insufficient documentation.
- Medicaid paid claims to ineligible medical providers, including those who had suspended or revoked medical licenses.
- The Earned Income Tax Credit program made payments to potentially ineligible recipients because it couldn’t verify wage information on early tax filers due to computer system limitations. Additionally, some employers filed W-2s after the filing deadline.
Federal Improper Payment Estimates, FY 2019
Federal spending for Medicare programs and Medicaid is expected to significantly increase in coming years, so it is especially critical to take appropriate measures to reduce improper payments. Agencies can take certain actions to help reduce their improper payments and safeguard taxpayer funds.
- Identifying susceptible programs
- Developing reliable methodologies for estimating improper payments
- Implementing effective corrective actions based on root cause analysis
- Reporting as required by statute