What A Waste: HHS Throwing Away Billions on Medicare

In this July 30, 2015 file photo, a sign supporting Medicare is seen on Capitol Hill in Washington.
AP Photo/Jacquelyn Martin

Everyone knows the government wastes money, but sometimes the sheer scale of it drives you crazy all over again.

A new report from the Inspector General for the Health and Human Services Department faults the agency for missing its target of keeping fraudulent Medicare payments below ten percent.

I’m not sure what’s worse: the fact that HHS is wasting more than ten percent of taxpayer dollars, or that the goal was to waste only ten percent.

Can you imagine if this was applied to other areas of life? Looks like the swimming pool lifeguard is getting a bonus this year: less than ten percent of swimmers died on his watch! Or try telling the IRS during an audit that “everything’s good: the error rate was below ten percent.”

The IG found the rate for Medicare’s fee-to-service program was 12.09 percent, but the topline numbers were equally appalling.

Medicaid spending as a whole was 9.78 percent fraud, barely under ten percent. No biggie, though. That program only costs $475 billion per year … wait, what? How can we possibly be wasting ten percent of that?

The IG report notes the government had set for itself the goal of only wasting 6.7 percent from Medicaid, or $31.8 billion. The difference between the actual amount of fraud and the goal was $14.6 billion. Get ’em next time, HHS, you’re only the cost of an aircraft carrier from your goal!

All this makes you think that surely – surely – there are urgent efforts to stop $4,000 a second from being completely wasted?

That’s funny. No, the next finding of the IG was faulting HHS for failing to conduct audits of its spending. HHS is supposed to be conducting these audits not just because they are wasting so much money, but because there is a duly enacted law making it illegal for them not to, and they still didn’t.

The program is called “Recovery Audit Contractors” (RACs), and it’s a tiny oasis of thrift in the Sahara Desert of squander. The program pays private auditors a small percentage of the funds they help the government recover, giving them a financial incentive to do the jobs federal employees won’t do.

In the past few years, the RACs have been able to identify more than $10 billion in fraud that was successfully put back into Uncle Sam’s bank account.

As you can imagine, the people previously receiving that $10 billion were not happy, and they hired a small army of lobbyists to launch a K Street jihad against the RACs. The Obama administration, which relied the money and power of some of the same industry segments (namely unscrupulous hospitals) to help pass Obamacare, sided with the RAC opponents, and has been slowly strangling the program to death.

The latest regulation limits the RACs to reviewing .5 percent of payments for the entities they’re supposed to be auditing, or one of every 200, which is just insane. That’s like evaluating a mural from a postage stamp-size patch of it – it’s impossible.

All of this is happening while wasteful payments are exploding. According to the Government Accountability Office, in fiscal year 2014 the government took $125 billion and essentially lit it on fire. One year earlier, the amount was $106 billion. If you extrapolate that rate of increase for ten years, the government would be wasting the entire cost of the Vietnam War every year.

At the very least, the Obama administration needs to stop trying to kill the RAC program, which is seems to be about the only effective way of combating waste yet invented, starting by giving the auditors access to review all payments, not a laughably-small portion of them.


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