President Obama Announces New Effort to Crack Down on Waste and Fraud

WASHINGTON—President Barack Obama today will announce a new effort to crack down on waste and fraud in Medicare, Medicaid, and other government programs through the expanded use of payment recapture audits. The initiative is the latest component in President Obama’s commitment to embrace the best ideas – from both parties – in advancing reform.

In his remarks on health insurance reform in St. Charles, Missouri, President Obama will discuss a new effort to recoup taxpayer dollars through the use of payment recapture audits, which offer specialized private auditors financial incentives to root out improper payments, and have been demonstrated through pilot programs to be highly effective. In fact, expanded use of payment recapture audits could return at least $2 billion in taxpayer money over the next three years– double the current amount of projected recovered costs.

The President will sign a presidential memorandum today that directs all federal departments and agencies to expand and intensify their use of payment recapture audits under their current authority.  He will also announce his support for the Improper Payments Elimination and Recovery Act, bipartisan legislation to expand the ability of government agencies to fund the audits with recaptured payments.

“The fact is, Washington is a place where tax dollars are often treated like Monopoly money, bartered and traded, divvied up among lobbyists and special interests.  And it has been a place where waste – even billions of dollars in waste – is accepted as the price of doing business,” said President Obama. “Well, I don’t accept business as usual.  And the American people don’t accept it either, especially when one of the most pressing challenges we face is reining in long-term deficits with threaten to leave our children a mountain of debt.”

The President’s health insurance reform proposal builds on an unprecedented array of aggressive new authorities to fight waste, fraud and abuse in the House and Senate bills with a number of additional proposals proposed by Democrats and Republicans alike.  President Obama, in a March 2 letter to Congressional leaders, also expressed interest in a proposal suggested by U.S. Sen. Tom Coburn (R-OK) at the bipartisan health care meeting on February 25 to use undercover investigations to further combat fraud.

A fact sheet on today’s announcement appears below:

FACT SHEET:  CUTTING DOWN ON WASTE AND FRAUD
THROUGH PAYMENT RECAPTURE AUDITS

Each year, the federal government wastes billions of American taxpayers’ dollars on improper payments to individuals, organizations, and contractors.  These are payments made in the wrong amounts, to the wrong person, or for the wrong reason.  In 2009, improper payments totaled $98 billion, with $54 billion stemming from Medicare and Medicaid.  We cannot afford nor should we tolerate this waste of taxpayer dollars and in our health care system.

Today, the President is announcing a new effort to improve accountability and cut down on this waste and fraud through the use of payment recapture audits.  These are investigations in which specialized private sector auditors use cutting-edge technology and tools to scrutinize government payments and then find and reclaim taxpayer funds made in error or gained through fraud.  These auditors can be compensated based on the amount of improper payments they identify and are reclaimed – providing a powerful incentive to find every error.  A pilot program run by Medicare in three large states – California, New York, and Texas – from 2005 to 2008 recaptured $900 million for taxpayers.

Currently, using reclaimed funds to pay for recapture audits is only possible for the Medicare Fee-for-Service program payments and for government contracts at the 20 out of 24 major government agencies that do more than $500 million in government contracting