Improper federal payments spike in 2009

Improper payments by the federal government went up by more than a third, hitting $98 billion during the 2009 fiscal year.

In response, the White House said that President Barack Obama will soon issue an executive order aimed at clamping down on improper federal payments, which have steadily risen in recent years.

In 2006, $41 billion in improper payments were handed out, according to the Office of Management and Budget (OMB). They increased to $55 billion to 2007 and to $72 billion in 2008.

More than $54 billion of the errors in 2009 involved healthcare payments by the Department of Health and Human Services. Of those, $24 billion of the improper payments were by the Medicare Fee-for-Service program, $18 billion were made by Medicaid and $12 billion were made by Medicare Advantage.

The overall increase was due to greater spending as part of efforts to fight the recession and better error detection, OMB Director Peter Orszag told reporters Tuesday.

He said that President Barack Obama will issue an executive order next week that aims to make the tracking of payment errors more transparent and will make a single official at each federal department or agency responsible for continued increase in errors. The order will also increase aid given to states to track and crack down on improper payments.

The amount of improper payments in 2009 was "too high," Orszag said.

"We need to protect taxpayer dollars," he said. Each dollar improperly paid out is a dollar that doesn't go to an unemployed worker, education programs or other administration priorities, Orszag added.

He said he wasn't able to say how much of the errors was due to fraud, noting that many of them were innocuous mistakes such as illegible signatures or miscalculations.

Sen. Tom Carper (D-Del.), who has a bill requiring agencies and departments with large amounts of improper payments to undergo audits and file reports to Congress, said he was "disappointed" but "not surprised" by the latest increase in errors. He said the errors may "just be the tip of the iceberg," as they don't include estimates for the Medicare drug prescription benefit and other large programs.

 "Further, this news shows that we have a lot to do here in the federal government when it comes professionalizing financial management and rooting out waste," Carper said. "It goes without saying that these results would be completely unacceptable in the private sector, as they should be in government, especially at a time of record deficits."

Here is a fact sheet about the improper payments and a chart detailing them.

---