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Mar 23

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GAO Reports Worsening Improper Payments

The Government Accountability Office (“GAO”) recently published a summary of the testimony of US Comptroller General Gene L. Dodaro regarding government efficiency and effectiveness.  The GAO reports annually to Congress on federal programs, agencies, offices, and initiatives (both within departments and government-wide) that are fragmented, overlapping, or duplicative.  It also identifies opportunities for cost savings or increased revenues.  One area that GAO highlighted as offering the potential for significant cost savings is improper payments, i.e. payments that should not have been made or were made in the incorrect amount.

For the first time in recent years, the government-wide improper payment estimate has significantly increased.  It is estimated at $125 billion in fiscal year 2014, $19 billion higher than the $106 billion reported for fiscal year 2013.  The increase primarily relates to Medicare, Medicaid, and the Earned Income Tax Credit, which combined account for over 76 percent of the government-wide estimate.

The recent increase reported by the GAO will no doubt increase pressure on government auditors to recover improper payments.  As a result, healthcare providers should expect increased scrutiny of their billings.  However, when faced with a statistically-based analysis from a government audit, providers should not assume that the government’s statistics are performed and interpreted without error.  Examples of the use of statistical extrapolation is described here, with additional information regarding the GAO findings in this related article.

About the author

Renee Howdeshell

Renee Howdeshell is a founding member of Fulcrum Inquiry, an accounting, finance and economic consulting firm that performs damage analyses for commercial litigation, forensic accountings, royalty & distribution audits, financial investigations, and business valuations. Ms. Howdeshell holds a degree in Finance and Marketing from the University of Virginia's McIntire School of Commerce and is a Certified Public Accountant (CPA) and a Certified Fraud Examiner (CFE). She has testified as an expert witness in federal court, CA state court and arbitration regarding the results of her work. She can be reached at (213) 787-4112 and her resume is available at www.fulcrum.com.

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