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An estimated $48 billion went to improper Medicare payments last year, out of the $509 billion spent on health care for elderly and disabled patients, an audit shows.

Medicare’s susceptibility to fraud, coupled with its size and complexity, has helped keep it on the GAO’s high-risk list since 1990.

The GAO has repeatedly requested that Medicare make a number of changes, and while some progress has been made, the agency has significant challenges to overcome. “Medicare remains on a path that is fiscally unsustainable,” warned Kathleen King, health care director at GAO.

The wrongful payment estimate does not even include Medicare Part D, the prescription benefit plan, which is expected to have significant improper expenses. The GAO found CMS oversight of Part D to be insufficient at deterring fraud and abuse.

Among the other criticisms in the GAO analysis, Medicare still has not finished an investigation from 2007 on over $700 million in payments. The agency developed a recovery audit program to analyze paid claims, identify overpayments, and tighten provider enrollment. But Medicare still has not developed a process to take corrective actions for vulnerabilities identified by the program.

Home oxygen payments were another source of waste. If Medicare had used the most affordable private insurer, it could have saved $670 million of the estimated $2.15 billion it spent on home oxygen refills. Medicare automatically pays for oxygen refills, even though not all oxygen equipment requires refills.

“CMS needs a plan with clear measures and benchmarks for reducing Medicare’s risks for improper payments, inefficient payment methods, and issues in program management,” the report said.

FAST FACT: Medicare is attempting to improve feedback with doctors. Up to 90 percent of health care spending is attributed to a physician’s influence on medical services.

Following are other new watchdog reports released by the Government Accountability Office (GAO), various federal Offices of Inspector General (OIG), and other government entities.


  • The Department of Homeland Security reduced its use of noncompetitive contracts last year, but not all contracts contained evidence of planning, analysis of vendor performance, and other requirements when not utilizing a competitive bidding process. The department obligated $1.3 billion last year for noncompetitive contracts. (OIG DHS)


  • The Tuition Assistance Program run by the Pentagon does not provide oversight of schools receiving funds, and does not consult accrediting agencies or the Department of Education’s monitoring. Last year, the program provided $531 million to approximately 302,000 service members. (GAO)

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