Multiple federal agencies wasted $162 billion in government funds by making improper payments during fiscal year 2024, with the Medicare program at the top, according to a recent report from the U.S. Government Accountability Office (GAO).
“Improper payments—those that shouldn’t have been made or were made in the incorrect amount—have been a government-wide issue for more than 20 years,” GAO said.
Five government programs accounted for roughly 75 percent of the improper spending.
Medicare topped the list with $54.3 billion. This was followed by Medicaid, the Earned Income Tax Credit, the Supplemental Nutrition Assistance Program, and the Restaurant Revitalization Fund.
“Eighteen federal programs reported improper payment rate estimates of at least 10 percent, including six programs whose rates ranged from over 25 percent to about 45 percent,” said the report.
Out of the $162 billion in improper payments, $135 billion (approximately 84 percent) were overpayments, GAO noted.
The remaining comprised underpayments, unknown payments, and technically improper payments. These refer to funds sent to recipients who were entitled to such receipts but the payment process did not follow the regulations.
Compared to fiscal year 2023, improper payments $74 billion lower in fiscal 2024.
“Agencies that reported substantial decreases attributed the declines to factors such as terminating or winding down certain programs,” GAO said.
“These include programs specific to the COVID-19 pandemic and programs for which agencies had temporary review flexibilities during the public health emergency (e.g., Medicaid).”
“The scope of this problem is not limited to any single agency or initiative—Medicaid, Medicare, Unemployment Insurance, and SNAP continue to be plagued by fraud, mismanagement, and outdated verification systems that allow ineligible recipients and criminal networks to exploit loopholes,” Talcove said at the hearing.
“More than 80 percent of Medicaid improper payments are due to eligibility errors. The root cause of this high rate of waste in the program is intentional policy choices—regulations that make it easier to get on the program and stay on as long as possible, even among those who are not actually eligible,” he said.
Tackling Improper Payments
Another GAO report published on March 11 said that agencies and Congress can take steps to “better manage improper payments and fraud risks.”The agency recommended making payment integrity enhancements. This includes setting up a permanent analytics center that would help identify improper spending and fraud.
Management of improper payment risks and spending data must be strengthened, the report said. GAO has already recommended that Congress pass legislation clarifying that chief financial officers at federal agencies subject to the Chief Financial Officers Act (CFO Act) have oversight responsibility over improper payment information.
The CFOs of each of these agencies must “certify, in the financial statement report, the reliability of improper payment risk assessments and the validity of improper payment estimates,” GAO said.
“Continued congressional oversight is critical to ensuring that agencies address improper payments and fraud in their programs. Congress can use a variety of tools—such as hearings and the appropriations, authorizations, and oversight processes—to incentivize executive branch agencies to improve program integrity and take efforts to prevent fraud.”
The bill would direct the president’s budget request to include critical data on fraud, abuse, and waste of federal funds, which is expected to plug gaps in improper payment reporting.
