Report blasts agencies for waste, fraud and abuse

klunney@govexec.com

Waste, fraud, and abuse continue to plague federal agencies, according to a report released by the House Budget Committee Tuesday. The report could be used as ammunition in the GOP's efforts to reduce spending in the fiscal 2001 budget.

The report, Reviving the Reform Agenda, based on findings by the General Accounting Office and inspector generals, lists four major problem areas for federal managers: improper payments, cited by GAO as at least $19.1 billion in 1998; the growing number of agencies and programs deemed at "high risk" for waste, fraud, and abuse; lack of financial accountability; and an increase in fraud, due in large part to the lack of sufficient government oversight.

Budget Committee Chairman John Kasich, R-Ohio, is a long-time advocate of cutting and reforming government agencies and programs. Kasich and the rest of the House leadership have been saying this year that the government could significantly reduce its spending by reining in out-of-control programs.

"This committee is going to have a hearing in the next couple of weeks on the issue of government reform, and I can tell you that in the areas of Medicare, Medicaid, food stamps, the earned income credit, and HUD, there has been virtually no improvement. Many of these systems are out of control; there is no accountability," he said in his opening remarks Feb. 8 to the Budget Committee's meeting on the fiscal 2001 budget.

Although the usual suspects-including the Defense Department and the Department of Housing and Urban Development-appeared in the waste, fraud, and abuse line-up, the report said that a growing number of agencies are experiencing mismanagement and accountability problems. Since 1995, the financial management operations of four major agencies-DoD, the Forest Service, the Federal Aviation Administration, and the IRS-have been added to the high-risk list.

Among the host of agency programs cited in the report as needing help, the Medicare and Medicaid programs have the distinction of attracting a new class of criminals who specialize in defrauding the government. Medicare has been plagued by "mail-drop" schemes in which perpetrators establish private mailboxes or dropboxes, set up false corporations and corporate bank accounts, and bill Medicare for services and equipment never provided. Government checks issued for these "services" are then deposited into the bogus corporations' bank accounts.

In a similar scenario, Medicaid has been victimized by criminals who obtain provider numbers as "medical suppliers" and then bill the government for imaginary equipment. According to the Budget Committee report, California's Medicaid program, known as Medi-Cal, experienced one of the largest frauds against a state in American history-losing what may turn out to be over $1 billion as a result of the scheme.

The House Budget Committee has scheduled a hearing Thursday to examine the government's high-risk programs.

The Office of Management and Budget did not immediately respond Tuesday to a request for comments.

A copy of the Budget Committee report is available online in PDF format.

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