Medicare and Medicaid Made $70 Billion in ‘Improper Payments’ Last Year—More Than All Spending by Homeland Security and State Departments Combined

By Terence P. Jeffrey | March 15, 2011 | 11:01 AM EDT

Dr. Donald Berwick, whom President Obama recess-appointed as director of CMS. (AP Photo/Goodman Media International, Inc.)

( - The Center for Medicare and Medicaid Services—the federal health-care agency that is a key bureaucracy in implementing Obamacare—made at least $70.5 billion in “improper payments” last year.

These improper federal health-care payments amounted to more than the combined total of $68.3 billion spent by the entire Homeland Security and the State departments last year, which spent $44.5 billion and $23.8 billion respectively according to the White House Office of Management and Budget. 

Medicare made at least $48 billion in improper payments in fiscal 2010 and Medicaid made $22.5 billion, according to written testimony on "Medicare and Medicaid Fraud, Waste and Abuse" presented to the Senate Subcommittee on Federal Financial Management by Kathleen King, director of health care for the Government Accountability Office.

The full amount of improper payments made by Medicare may be higher than $48 billion because the Center for Medicare and Medicaid Services has not yet estimated the dollar amount of improper payments made by Medicare Part D, the prescription drug-benefit program.

“An improper payment,” said the GAO, “is any payment that should not have been made or that was made in an incorrect amount (including overpayments and underpayments) under statutory, contractual, administrative, or other legally applicable requirements.”

Total combined federal expenditures for Medicare and Medicaid in fiscal 2010 were $781.6, according to the U.S. Treasury. That means the $70.5 billion in improper payments Medicare and Medicaid made during the year equaled 8.95 percent of all Medicare and Medicaid expenditures.

“GAO has designated Medicare and Medicaid as high-risk programs because they are particularly vulnerable to fraud, waste, abuse, and improper payments (payments that should not have been made or were made in an incorrect amount),” the GAO's King told the Senate subcommittee. “Medicare is considered high-risk in part because of its complexity and susceptibility to improper payments, and Medicaid because of concerns about the adequacy of its fiscal oversight to prevent inappropriate spending.”

A key element of Obamacare provides government health-insurance to lower income people by increasing the income threshold for Medicaid eligibility and putting more people on the Medicaid rolls.