Committee for a Responsible Federal Budget

Reducing Improper Payments

Jul 22, 2010 | Health Care

Today, President Obama signed the Improper Payment Elimination and Recovery Act, hoping to make a dent in wasteful spending. Improper payments are exactly like they sound: payments made to the wrong people, at the wrong time, or for the wrong reason. After they totaled a high of $110 billion in 2009, the Obama Administration decided to crack down hard on these payments.

The Administration's goal is to cut improper payments by $50 billion by 2012. They have made a number of steps to get there already, such as expanding the use of payment recapture audits, establishing a single Federal Do Not Pay List, and focusing on improving Medicare's improper payment rate (which is disproportionately high). This bill would further the cause by mandating agencies to assess their risk for improper payments and making "high-risk" agencies measure their improper payments, expanding further the use of payment recapture audits, and instituting punishments for agency non-compliance.

We support President Obama's effort to cut down on improper payments, since it is long overdue. The savings could be significant if they are able to accomplish their goal. Of course, this is no replacement for having a plan to get our medium- and long-term deficit problems fixed.