American Elephants

Sloppy Bookkeeping, Error, Waste and Fraud. by The Elephant's Child

John Steele Gordon wrote at Commentary magazine:

Imagine that a health insurance company chose a random sample of payments made to its claimants and found that 10.1 percent of them should not have been paid at all, either through error or fraud. What do you suppose would happen?

First, whoever was in charge of accounts payable would be fired on the spot, his office contents on the sidewalk in cardboard boxes before the day was out. Second, a thorough overhaul of procedures would be quickly put into place to make sure the error rate was reduced to as near zero as possible. Third, a federal prosecutor would open an investigation into possible criminal activity. Fourth, a congressional committee would convene hearings and beat up the CEO for charging such high premiums when simply running his company properly would have allowed them to be drastically reduced.

But when Medicare’s fee-for-services programs ran exactly this error rate, the result was … oh, look, a squirrel!

At what point do we start talking about “real money?” Do our government officials get so accustomed to speaking in terms of trillions (the budget deal just signed into law) and billions that they lose any sense of what their casual expenditures and sloppy bookkeeping mean to a taxpayer’s family budget? Or do they simply think of it all as “government money” and fail to recognize that it all came out of the pocketbooks of real people?

The Department of Health and Human Services (HHS) had exactly that error rate in 2013, and paid no less than $33.2 billion that it shouldn’t have paid at all. Overall they paid out $55.9 billion improperly. Was anyone in accounts payable escorted to the street accompanied with their office contents? Don’t be silly.

The Center for Medicare and Medicaid services spokesman Tony Salters said CMS doesn’t even attempt to recover all of its estimated overpayments. He said that agency contractors attempt to recover improper payments, and get “most” of that back, but those improper payments represent only a fraction of the total amount paid out incorrectly.

The White House’s Office of Management and Budget (OMB) estimates that in just 13 “high-error programs” in fiscal 2012 wrongly paid out a shocking $101.3 billion. That’s a 2.86 percent of total federal spending — $16 billion more than the entire sequester for fiscal 2013. The sequester, with shrieks of pain and suffering, amounted to $85.4 billion and the end of the world.

Insurance companies, criticized and demonized, run tight ships, constantly looking for ways to cut costs and eliminate fraud and error. Any business with a 10.1 percent error rate would quickly end up in bankruptcy court. But there seems to be no check on government agencies. They cannot go bankrupt, and they apparently cannot be held to account for their intransigence. After all, it’s just “government money.”


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