OMB touts $17.6 billion in savings from Campaign to Cut Waste

The Office of Management and Budget on Tuesday reported that it had prevented $17.6 billion worth of what would have been improper payments in fiscal 2011, the latest achievement of the Obama administration's six-month-old Campaign to Cut Waste.

Savings from thwarted payment errors, chiefly in Medicare, Medicaid, Pell grants and food stamps, put the administration on track to meet its goal of $50 billion in prevented improper payments by 2012, OMB said in a statement.

"When the president and I launched the Campaign to Cut Waste, we knew success would be measured by results, not rhetoric," Vice President Joe Biden said. "The sharp reduction in payment errors announced today demonstrates this administration is serious about cutting waste."

OMB Director Jack Lew stressed the importance of technology in saving money.

"Through aggressive and innovative solutions being deployed by federal agencies, we are on track to meet the president's bold directive to prevent $50 billion in payment errors by the end of 2012," he said. "This is a good step, but not the end. We will continue to work day and night to prevent taxpayer dollars from being wasted in payments to the wrong people or in the wrong amount."

Specifically, OMB said, agencies cumulatively have:

  • Cut the 2011 governmentwide error rate to 4.7 percent, a sharp decrease from the 2010 error rate of 5.3 percent and the 2009 error rate of 5.42 percent;
  • Prevented $17.6 billion in wasteful payments as a result of the declining error rate (for a total of $20 billion since 2009); and
  • Recaptured more than $1.2 billion in overpayments from government contractors last year.

"Federal agencies are increasing scrutiny of payments by initiating more robust audits, leveraging new technologies, or building partnerships with states focused on improved program integrity," OMB said.

The achievement was announced as part of the Obama's We Can't Wait campaign, highlighting the administration's effort to govern despite deadlock in Congress. Officials called on Congress to enact other anti-waste proposals from President Obama's February budget. "Until Congress acts, we will continue doing everything in our power to save money on behalf of the American people," said Health and Human Services Secretary Kathleen Sebelius.

She announced that HHS is setting up four additional pilot programs to reduce error rates and cut Medicare and Medicaid waste and fraud. They include greater use of payment screening by private inspectors through the Recovery Audit Contractors program, a pilot program to allow some hospitals to bill claims incorrectly filed as inpatient claims under the outpatient program, tighten the process for approving payments for medical equipment with high error rates, and work with states to better focus resources in fraud detection.

In addition, Lew directed agencies to step up oversight of contractors to curb risk of waste, fraud and abuse, including stepped-up use of the suspension and debarment tool against dishonest contractors.

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