I was talking earlier today about how to reduce the amount of overpayments--we call them improper payments--the Federal Government makes. Last year they added up to almost $100 billion, not counting the Department of Defense, not counting part of Medicare, not counting part of the Department of Homeland Security--a lot of money.

 

I also added that Federal agencies are doing, for the most part, a better job of estimating and identifying costly mistakes of improper payments. I think the White House deserves credit. Not only this President but his predecessor George W. Bush deserve credit for, not only in the case of George W. Bush, saying: We ought to have improper payments in the law and we ought to make this a priority, but also for President Obama and his team who are beginning to scour Federal programs for improper payments and also taking strong steps to try to eliminate them in the future.

 

White House Budget Director Peter Orszag noted that agencies employed stricter standards for identifying improper payments, resulting in much of last fall's reported improper payments increase. I remember maybe 5 years ago, when Senator Coburn and I were working on this issue, we found there was maybe $40 billion worth of improper payments being reported by Federal agencies. Last year it was about almost $100 billion. So it sounds as if we are going in the wrong direction.

 

As it turns out, what has actually happened is more agencies are reporting it. Initially, not very many agencies were reporting it, but as we have fuller reporting by all the agencies, we find we have a better idea of how big the problem is. It is not so much that it is getting worse, it is just that we are having better reporting from the agencies.

 

Now that we are having that, the key is to make sure the agencies that are making improper payments make fewer of them, and then that we go out and recover the moneys that have been improperly paid.

 

The White House announced this winter--earlier this year--an executive order to not only improve the collection of improper payments data, but to also improve our ability to avoid making improper payments, and to increase what I think is important, the use of recovery auditing. I say the words ``recovery auditing''—post audit cost recovery. I think for most people, their eyes kind of blur over and they tune out. We are talking about $100 billion here, money that is going out, most of it improperly, a lot of it overpayments. We are talking about a country where our deficit is over $1 trillion. If we are going to have the ability to reduce our deficit, it is not going to come from any one silver bullet or any one particular approach. But this is an approach that can help.

 

I applaud the administration's concrete steps to improve transparency and make agencies and agency leadership more accountable.

 

Still, there is a lot more we can do, which is why our legislation currently on its way to the President's desk is so important in order to take the next steps, especially when it comes to actually going out and recovering the money we lose every year to avoidable errors and preventable fraud.

 

As I often say to my staff--they have heard me say this more times than they care to remember--if it is not perfect, make it better. Everything that I do, I know I can do better. That includes making sure we are making the appropriate payments to the right entity, for the right amount of money.

 

All of us in Congress share this responsibility to do that; that is, if it is not perfect, to make it better. We all share a responsibility to do that in curbing waste and fraud.

 

The legislation that I think the House is going to pass later today, and hopefully the President will sign later this month, is called the Improper Payments Elimination and Recovery Act. It is the result of a 6-year journey. During the last Congress, I introduced an earlier iteration of this bill with Senator Claire McCaskill of Missouri. Over the last several years, I have chaired hearings on the issue of improper payments, waste, and fraud. Since then, we have worked with the Office of Management and Budget, the Congressional Budget Office, many other inspectors general, and many other experts to refine and strengthen our legislation.

 

The most recent version of that legislation was introduced last summer--about a year ago--along with Senator Lieberman, who chairs our full committee, Senator Collins, the ranking member of the Homeland Security and Governmental Affairs Committee, Senator McCain, and Senator McCaskill. It was approved by the Committee on Homeland Security and Governmental Affairs late last year and was approved by the full Senate in June of this year. A companion bill was also introduced in the House by Representative Patrick Murphy from Pennsylvania, our neighbor to the north.

 

This legislation, I believe, is a perfect example of bipartisan common sense and bicameral common sense. And actually when you consider Senator Lieberman is an Independent, it is tripartisan--Democrat, Republican, and Independent.

 

I think the bill makes a number of key reforms. First of all, it improves transparency by lowering the threshold whereby agencies are supposed to report improper payments. This will better inform the public about where their taxpayer dollars are going, and it will help us in Congress find ways to fix the problems that lead to waste.

 

The second key reform in this legislation is it requires agencies to produce audited corrective action plans with targets to reduce waste. It is all well and good that we report improper payments or wasteful payments. The key is to stop doing it, to not just report it but to go after it and stop repeating the same mistakes.

 

A third reform is that this legislation increases the recovery of overpayments by requiring all agencies that spend more than $1 million a year to perform recovery audits on all their programs.

 

Finally, fourth and last, the legislation penalizes agencies that fail to comply with Federal financial management and accounting laws and would make sure that progress in eliminating improper payments is part of senior agency officials' performance evaluations. So you say to somebody who is like a leader or supervisor in these Federal agencies: Part of your evaluation is going to be whether you are doing a good job of stopping overpayments, going out and making sure you do not make more of them, and going out and collecting money that is being ``mispaid'' or overpaid.

 

I am particularly pleased with the provision in the bill requiring major agencies to make greater use of tools that many private sector business use to recover overpayments when they make them. When agencies have used these tools, they have had some success, some real success.

 

About 7 years ago, 2003, Congress mandated what was at the time described as a pilot Recovery Audit Contractor Program to examine Medicare fee-for-service payments. In other words, Congress said: OK, Medicare, when you are making these fee-for-service payments to doctors, hospitals, and nurses, we want you to do, in three States--California, Florida, and New York--we want you to look at those three States and see if we are overpaying money. If we are making mistakes in Medicare, go get it.

 

I think a year or so later, we added to the initial three states Massachusetts and South Carolina. During the first year of this demonstration program, about $50 million was recovered and returned to the Medicare trust fund. In the second year, about a quarter of a billion dollars was recovered, returned to the Medicare trust fund. I think if you add the total for the 3-year pilot program, which ended up in five States, they recovered about $1 billion. They recovered about $1 billion. It is real money.

 

One of the reasons why the Medicare trust fund is running out of money is because of fraud. Some people may have seen--I think it was on ``60 Minutes'' a year or so ago. Mr. President, ``60 Minutes'' did a special where they focused on a bunch of doctors' offices in some town in south Florida. The doctors' offices had three things in common: One, they had no patients; two, they had no doctors; three, they had no nurses. All they were were like a billing operation on Medicare, to defraud money from Medicare and take it from the Medicare trust fund.

 

Last year, we were looking at the Medicare trust fund running out of money in about 8 years. That is untenable. With the changes we have made in the health care reform legislation, I think we pretty much doubled that life to maybe closer to 15 or 20 years, but we still have a problem. With all the money that is defrauded from Medicare, we want to recover as much of it as we can and put it back into the program.

 

But in any event, the pilot program--which started in three States and expanded to five States--this year we are expanding it to all 50 States.

 

There is also a provision in the recently enacted health care law--it is called the Patient Protection and Affordable Care Act, it is the health care reform legislation adopted earlier this year--but there is a provision that says to the folks who run health care at the Department of Health and Human Services that they have to expand this program, this cost recovery program, to include Medicare Advantage, to include the Medicare prescription drug program, and also to include Medicaid. As money is recovered from fraud and overpayments and missed payments in Medicaid, that money will be split between the States and the Federal Government.

 

The sooner the full program is up and operating, the sooner we can recover even more money--I think probably billions of dollars--in additional overpayments.

 

There is an added benefit to an expansion of recovery auditing. The Recovery Audit Contracting pilot program has identified dozens of vulnerabilities in the Medicare payment system that can lead to additional waste and fraud.

 

According to the Centers for Medicare and Medicaid Services--that is the entity that oversees Medicare and Medicaid--the contractors hired to recoup overpayments identified ongoing vulnerabilities that could lead to future overpayments totaling about a third of a billion dollars more. So not only did the contractors recover about $1 billion in overpayments in the 3-year pilot program, they also identified additional problems in the systems they looked at, which, if we will address them, will reduce and avoid errors in the future.

 

Tomorrow--what is today, Wednesday?--tomorrow, Thursday--I think tomorrow afternoon--the Subcommittee on Federal Financial Management, which I am privileged to chair, will hold a hearing, and that hearing will examine the history and the opportunities for the Medicare Recovery Audit Contracting.

 

In conclusion, the Improper Payments Elimination and Recovery Act, which again, hopefully, the House will pass today--the Senate has already passed it; and hopefully the President will put his ``John Henry'' on it later this month--that legislation will allow us to make even greater strides in curbing waste and fraud in the work of Federal agencies during the years ahead. Given the size of the budget deficits we face, we need to do that.

 

Enactment of this legislation is not the last step, but it is an important step. I look forward to seeing this important legislation signed into law and to working with my colleagues and with the administration on its successful implementation.

 

A lot of times people say to us: Why don't you do something about waste, fraud, and abuse? They are convinced that a lot of their money ends up being misspent, improperly spent, overpaid in some case. The people, or entities, businesses, should not get any of this money. Somebody ought to do something about it. With the legislation that will be on its way to the President, hopefully tomorrow, we are going to do something about it. We already are doing some pretty good things about it. We are going to do more, and we need to build on that record.