Official estimates put the amount of improper payments in federal subsidy programs at about $100 billion a year, with Medicare and Medicaid accounting for more than half. The actual loss to taxpayers is probably much higher.
The Government Accountability Office has issued a new report illustrating why improper payments are so high. It focuses on poor contract management at the Centers for Medicare and Medicaid Services (CMS), which administers Medicare and Medicaid:
Pervasive deficiencies in CMS contract management internal control increase the risk of improper payments or waste. Specifically, based on our statistical random sample of 2008 CMS contract actions, GAO estimates that at least 84.3 percent of fiscal year 2008 contract actions contained at least one instance where a key control was not adequately implemented. GAO also estimates that at least 37.2 percent of fiscal year 2008 contract actions had three or more instances in which a key control was not adequately implemented.
The fact is, the health care market…is extremely muted and extremely screwed up and it’s largely because of my agency. For those of you who don’t follow CMS, which used to be called HCFA, we changed the name because it was so well loved. I always say it’s kind of like when Enron comes out of bankruptcy, they’ll probably change their name. So, HCFA—Secretary Thompson and I decided to confuse everybody. We changed the name to CMS for a couple of years so people wouldn’t realize we’re actually HCFA. So far, it’s worked reasonably well.