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Questionable government payments on rise, administration says

By Michael A. Fletcher
The federal government made $98 billion in questionable payments to contractors and individuals last year, the Obama administration said Tuesday, a sharp increase from the previous year when the government improperly paid out an estimated $72 billion.

The increase does not necessarily mean fraud is growing, said White House budget director Peter Orszag. But the administration is moving quickly to address the issue.

Orszag said Tuesday night that new, stricter government methodology for identifying outlays is behind the sharp rise in improper payments, as is the large increase in federal spending to response to the deep economic downturn.

Improper payments cover a wide range of occurrences, ranging from outright theft to a contractor unwittingly being issued two checks for the same service or a doctor receiving a Medicaid payment that is claimed with an illegible signature.

Still, Orszag said, the rate of the questionable payments has to be reduced. "We can no longer tolerate these errors, mistakes and misdeeds," he said.

Orszag said President Obama will issue an executive order in the near future that will require agencies to post new online "dashboards," making it easier for the public to access information about improper payments by program.

The order will also require agencies to set up e-mail addresses or Web sites for the public to reported suspected fraud or other abuse involving federal funds. Agency officials will be held accountable for lowering the rate of questionable payments, Orszag said.

In addition, the federal government will create incentives for better compliance, by seeking to charge penalties to contractors who receive overpayments and by offering bonuses to local governments and other entities that reduce improper payments.

Sen. Tom Carper (D-Del.), chairman of the Senate Subcommittee on Federal Fiscal Management, applauded the administration's effort, adding that the problem of questionable payments is much too large.

"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 in a statement. "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."

The Office of Management and Budget reported that the questionable payments occurred in agencies in many corners of the federal government. More than 15 percent of payments under Medicare Advantage -- a program the Obama administration wants to slash to help pay for its health are reform plan -- were improper, OMB said.

Also, 7.8 percent of Medicare fee-for-service payments, 5.8 percent of federal crop insurance and a quarter of payments made to low-wage workers who claim the Earned Income Tax Credit were found to be questionable.

By Michael A. Fletcher  |  November 17, 2009; 11:30 PM ET
Categories:  Economy  
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rowens1... This has been happening forever under every President, so quit trying to blame Bush because your best friend Obama can't get it right.
Wake up and smell the roses government is corrupt, it has been for years it always will be and the government cannot operate any program without a loss, truth is it was figured into the bid, or into the program to begin with and whats a few billion to the national debt. not Obama or congress will stop the bankruptcy of the country.

Posted by: jhnjdy | November 18, 2009 10:44 PM | Report abuse

The United States creates private agencies to police other private agencies which are suppose to police other private agencies. And the only reason these agencies exist is because some beaurocrat decides that they are necessary, and thus, deserving of tax payer money. How much money did "The Contract for America" really save our tax payers? Hasn't all this resulted in the privatization of our traditional government offices where the cost of services are determined by the company CEOs and board of trustees. Why is there fraud? Maybe it is because these agencies are accountable to their share holders and their bottom line and not the people of These United States of America. If these companies started blowing whistles and doing their jobs other private contractors might retaliate by blowing the whistle on their fraudulent practices and so on down the line. That is why these private contractors will never police themselves or other contractors for fear of aquiring the handle of "Whistle Blower". It is time to turn back the clock. It is time to defund these private contractors and restore government agencies where there is no profit motive involved in decision making. Newt Gingrich be damned!

Posted by: Fascistfighter | November 18, 2009 12:48 PM | Report abuse

It's time the FED gets some of this money back. If a contractor was issued two checks on the same bill they would know they should return one of the checks. This is just good business. As for impropeer payments paid to medicare/medicaid providers the Fed should have a good accounting system in place. There is no excuse for this kind of misuse of taxpayer money.
Let's hope this program to address the problems is effective and not just window dressing.

Posted by: OhMy | November 18, 2009 12:44 PM | Report abuse

Private health insurance industry wasted spending 30 percent...wasted spending hidden like a national security secret...

Health and Human Sevices self identified wasted spending9.4 percent...

yep, that is a change that will bend the cost curve down...

no wonder teabagging Republicans are behaving so unethically–even for them–to stop health care reform.

The teabagging GOP said at the outset their Legislative and Politial strategy to improve life for the citizens of United States was to ensure President Obama's failure.

So if we turn health care in the U.S. into a national health care system we will–starting day one–cut waste by 20 percent.

Those are numbers even teabagging Republicans can understand and fear.

Those are numbers that the paymasters of the teabagging Republicans have understood since election day.

Those are numbers the insurance industry has feared since the day they got Congress to guarantee the insurance industry profits with that favorite of the U.S.'s private sector government regulation–that would be the McCarran-Ferguson Act which exempts the insurance industry from anti-trust laws.

Posted by: teoc2 | November 18, 2009 11:22 AM | Report abuse

Doesn't the government have checks and balances? There are organizations that send out bogus invoices. But systems can be instituted to prevent paying them. I suspect the people paying the bills are overworked and overwhelmed. But phony invoices should not be paid. 60 minutes did an article on bogus Medicare payments. Someone needs to get a handle on this problem because it is costing taxpayers!

Posted by: MNUSA | November 18, 2009 10:44 AM | Report abuse

The Bush Cheney machine has excelerated their theft. How long will it take to find and expel this Abramhoff GOP model of raiding the government treasury?

How many Bush appointees are still distributing cash?

Posted by: rowens1 | November 18, 2009 9:37 AM | Report abuse

Yet they somehow still think a government run health system will lower costs.

Posted by: akmzrazor | November 18, 2009 9:23 AM | Report abuse

Peter Orszag, director of the Office of Management and Budget, told reporters. "Every dollar that goes to the wrong recipient or in the wrong amount is a dollar not available to help an unemployed worker, or to invest in education or key priorities of the administration."
Here's the funny part: The Obama administration regrets that the money "lost" could have been spent on the programs that lost it.

Posted by: rpatoh | November 18, 2009 9:21 AM | Report abuse

Just follow the money; most should be in the off-shore bank accounts of our elected corruptocrats.

Posted by: apberusdisvet | November 18, 2009 9:12 AM | Report abuse

I bet the czars got it. To many beer parties, and pay backs for votes.

Posted by: myop1 | November 18, 2009 9:11 AM | Report abuse

>>My question is: Who is committing all this fraud?
Posted by: Frazil | November 18, 2009 6:38 AM

As reported on

By HOPE YEN, Associated Press Writer

Among the reported waste:
_Agriculture: $4.3 billion in improper payments, or 5.9 percent of total department spending. Much of it was in the food stamp, federal crop insurance and school meals programs.
_Defense: $849 million, or 0.5 percent.
_Education: $599 million, or 2.1 percent.
_Health and Human Services: $55.1 billion, or 9.4 percent. That included improper payment rates of 7.8 percent and 15.4 percent in the Medicare fee for service and Advantage programs, respectively.
_Homeland Security: $644.5 million, or 3.7 percent. Much of it was in the Homeland Security grant program as well as Disaster Relief Fund Vendor Payments.
_Housing and Urban Development: $1 billion, or 3.5 percent. All of it was attributed to public housing and rental assistance.
_Labor: $12.3 billion, or 9.9 percent. Almost all of the improper payments were in the unemployment insurance program.
_Treasury: $12.3 billion, or 25.5 percent. All of it was attributed to improper payments in the earned income tax credit.
_Transportation: $1.5 billion, or 3 percent. Much of it was in the Federal Highway Administration planning and construction program.
_Veterans Affairs: $1.2 billion, or 2.7 percent. That included improper payments in the pension and other compensation programs.
_Social Security Administration: $8.0 billion, or 1.2 percent.
Taxpayers shouldn't feek ripped off though, because only Obama is being ripped off:

Peter Orszag, director of the Office of Management and Budget, told reporters. "Every dollar that goes to the wrong recipient or in the wrong amount is a dollar not available to help an unemployed worker, or to invest in education or key priorities of the administration."

Posted by: rpatoh | November 18, 2009 9:00 AM | Report abuse

The Obama administration canned the federal prosecutor that was going after the Sacramento mayor for just this kind of abuse.

Posted by: edbyronadams | November 18, 2009 8:29 AM | Report abuse

And they want us to believe that the government can run healthcare efficiently!

Posted by: jhnjdy | November 18, 2009 8:19 AM | Report abuse

When is the administration going to address the waste, fraud and abuse in Medicare? If there is 500 billion dollars of abuse in this program they should be targeting it immediately and not waiting for the health care bill to become law!

Posted by: mwhoke | November 18, 2009 7:35 AM | Report abuse

Dear Mr. President Barack Obama: As part of my federal criminal investigative career in the war against corruption by federal management officials got me "burned" and my former employer retaliated and discriminated against me. I retired in 2006, andin 2008 a rogue IRS revenue agent examined my 2006 tax return. She was abusive and unprofessional. I complained to her supervisor, IRS Taxpayers Advocate, and TIGTA. IRS added an extra year to the examination. A TIGTA top level official lied to my local US Senator, and I closed down my small one man office I stopped volunteering. Your administration need to look at corruption more closely. However, don't let the federal "empty suit" top managers go after employees who report criminal and administrative conduct. The two most corrupted federal agencies and their watchdogs departments are ICE and DHS; and IRS and TIGTA.

Posted by: doctormiguel | November 18, 2009 7:02 AM | Report abuse

My question is: Who is committing all this fraud? Were does it come from? Who is asking for payment for questionable services. Sure its easy to blame the government beaurocrat for making the payments. But isn't it the private contractor that is submitting the fraudulent bills. Are they not to blame for ripping off the taxpayer.

If you take your car to the mechanic for work and the mechanic bills you for work not performed, whose fault is that. Yours or the mechanic's

Posted by: Frazil | November 18, 2009 6:38 AM | Report abuse

How in the world can AMYONE pay out 98 billion dollars and not knowing where it is GOING. Someone needs to REALLY investigate this and find out where that money went. That is alot of money that can be used somewhere else where it would do some good, and when they find out where the money went...FIRE all that was involved!!!!!!!!!!!!!

Posted by: vr58po1 | November 18, 2009 6:09 AM | Report abuse

I understand now!! Up until this point, we have tolerated sloppy disbursements whose amount would dwarf the budget of some small countries. But according to Orzag, we can "no longer tolerate" them. That's good!!! And that old fraud, waste, and abuse hotline, which has been around FOREVER is no longer adequate; agencies will now need "email addresses," or "web sites" to control all the fraud. By far my favorite factoid in this story, however, is that just because fraud increased almost 20% year over year, it does not necessarily mena "fraud is growing."

If an increase of that size does not mean fraud is growing, just what the heck does it mean?

Posted by: Curmudgeon10 | November 18, 2009 6:03 AM | Report abuse

Questionable Payments?Waste?Fraud?Abuse? How do you spell TARP?

Posted by: jeromejmarkiewicz | November 18, 2009 2:52 AM | Report abuse

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