Obama Administration finds, exorcises $18 billion in government waste

The White House OMB (Office of Management and Budget, for those who'd rather spend time with friends and family than spelunk through the inner organs of the White House) is bragging this week about various billions of dollars in savings achieved through Obama-initiated efforts to cut government waste, particularly improper payments. Actually quite a large number of billions of taxpayer dollars.

(Sound of crickets chirping).

That's sound you didn't just hear was the right-wing political apparatus responding to this rather commendable effort. Not too surprising.

What Obama has done, via good old-fashioned Executive Order, is to launch something catchily called the Obama Administration's Campaign to Cut Waste. This was fired up in 2010 or so, we believe (hey, check out the website yourself. We don't have time for proper research.) and has thus far eliminated $20 billion – that's billion – in erroneous government payments, overpaid contractor payments and other completely unnecessary expenditures of your hard-earned tax money that were flowing out of the government unimpeded and unaudited for decades (particularly during the George W. Bush Administration, which wasn't, for obvious reasons, a big fan of oversight) before the Obama order took effect.

The plan is to cut payment errors by $50 billion by the end of 2012, which seems like a worthy and obvious goal. What amazes us is the sheer scale of improper payment waste. $50 billion is equal to... let's see, $50,000,000,000 divided by 300,000,000 Americans, give or take, equals... $167 per American human. That's kind of a lot.

The program works through improved oversight, auditing, better technologies and Federal-State partnerships. It also seeks to recover overpayments to government contractors, which resulted in $1.2 billion "recaptured" last year. Again, these figures are staggering, to us at least. Maybe we're not sufficiently desensitized.

The OMB's release mentions a number of areas where government waste has been reduced, with plans to reduce it even more in the coming years:

• Medicare & Medicaid: The Medicare "fee-for-service" rate was at 9.1% in 2010. It's down to 8.6% in 2011, and has fallen 2 percentage points since 2009, when Obama took office. Total Medicare savings $16 billion, if we've interpreted the OMB numbers correctly,
• Food Stamps, now catchily called "SNAP" (Supplemental Nutrition Assistance Program): Error rate's down to 3.8% this year, with just shy of $1 billion in savings. According to the OMB, "The program has decreased its error rate every year of the Obama Administration. USDA also reduced the prevalence of trafficking to 1 percent.  This decline can be attributed to USDA’s work with States reducing fraud and holding bad actors accountable. Using the latest technology to identify suspicious activity and putting boots on the ground to investigate it, USDA has permanently disqualified more than 8,300 retail stores over the last ten years."
• Pell Grants: Error rate drops to 2.7%, with a corresponding $300 million savings. Here, partly, is why: "In 2010, the Department of Education implemented a process to allow Federal Student Aid applicants filling out online applications to go to the Internal Revenue Service (IRS) website to retrieve their income information and transfer it directly to their application. This process helps prevent improper payments in the Pell Grant Program by making it easier for students and parents to enter the correct tax return information and receive the correct amount of student aid."

Here's how they plan to move forward:

Secretary Sebelius announced that the Department of Health and Human Services will launch four additional pilots to reduce the error rate and cut Medicare and Medicaid waste and fraud:

• Let private inspectors catch wasteful spending before it happens by expanding the use of Recovery Audit Contractors. At HHS and other agencies, private recovery audit contractors normally review payments and identify errors after the payments are made. Then, the agency must track down and recover the improper payments. Last year, private companies recovered hundreds of millions of taxpayer dollars by finding improper payments that have already been paid out. The agency will now allow private companies to screen certain hospital payments before they are made, which will prevent improper Medicare payments from happening in the first place.

• Test changes to outdated hospital billing system to help prevent over-billing. Hospitals sometimes perform services as inpatient that Medicare requires to be outpatient. Right now, when those hospitals bill Medicare, HHS does not allow them to re-bill as outpatient. Under this pilot, HHS will allow some claims that are incorrectly made under the inpatient program to be resubmitted under the outpatient program. This mistake—incorrect billing of services—is a leading cause of error in the Medicare program and wastes time and money in appeals.

• Change its process for approving payments for medical equipment with high error rates. One contributor to the Medicare improper payment rate is incorrect reimbursement for medical equipment that is not medically necessary. This change will allow HHS to pilot a new process for reviewing these medical equipment claims before they are made, thus helping to reduce Medicare improper payments.

• Work with States to improve fraud detection. HHS is initiating a pilot project under the Partnership Fund for Program Integrity Innovation to test an automated tool to screen providers for the risk of fraud. Currently, HHS and States lack standardized Medicaid provider data, which hampers detection of potential fraud. If successful, this tool will not only help prevent improper payments by weeding out fraudulent providers, but it will help States focus their resources where fraud is most likely to occur.

You can read all the details at the OMB, right here.