$50 billion in Medicare waste? Yes, that's how much in 'improper payments' are made per year

At a town hall in New Hampshire, U.S. Rep. Tim Ryan of Ohio, one of the many Democrats running for president in 2020, was asked how he would stop the federal government from wasting taxpayer money.

"This has got to be a major initiative for Democrats; we don’t talk enough about waste in the government," Ryan replied. "If you look at the Medicare program, for example, there is $50 billion a year wasted in the Medicare program. That’s a billion dollars a week."

It’s a claim the 45-year-old Youngstown-area resident, a moderate who has been in Congress since 2003, has made going back to at least 2017.

Waste is enough a problem that it is part of an acronym used by the federal Centers for Medicare & Medicaid Services: FWA, for fraud, waste and abuse. In a training manual for employees, CMS says with bold type and an exclamation point that "combating FWA is everyone’s responsibility!"

Ryan’s figure is solid. But let’s see whether it’s really "waste."

Medicare is health insurance primarily for people 65 and older, but it also helps millions of citizens with disabilities. It is massive: The program spends about $700 billion per year serving some 58 million Americans and making payments to 1 million entities.

Lately, some Democrats who have announced or are pondering a run for president have made claims about huge cuts to Medicare. Those statements haven’t fared all that well on our Truth-O-Meter.

To back Ryan’s statement, his campaign cited 2018 testimony to a congressional subcommittee from a gold-standard source, the U.S. Government Accountability Office, which is a nonpartisan auditing and investigative agency that serves Congress.

The testimony from Seto Bagdoyan, a GAO director of audit services, was on recommendations for handling fraud in Medicare. He said that during fiscal year 2017 — Oct. 1, 2016 through Sept. 30, 2017 — the Department of Health and Human Services, which administers Medicare, reported "improper payments" for Medicare of $52 billion. He noted that the figure could include payments that were a result of fraud, but that there are no reliable estimates of fraud in Medicare.

The figure for fiscal year 2018, Badoyan told us, is $48.5 billion.

Featured Fact-check

Sara Jacobs

stated on December 18, 2024 in an X post

Government shutdowns in 2013 and 2018 “cost our economy billions of dollars each.”

Now to "waste" vs. "improper payments."

Under federal law, an improper payment is one "that should not have been made or that was made in an incorrect amount, including overpayments and underpayments." These could range from coding errors in the billing process to fraud, such as companies billing Medicare for services that were never provided.

Of the $52 billion Ryan alluded to, $45 billion consisted of overpayments and $7 billion, underpayments, Badoyan told us.

So, that was money "wasted," in the general sense of the word, in that much of it, at least, was spent unnecessarily.

Some Medicare experts think the word "waste" goes too far. "I wouldn't call this waste  — some may be, but it is difficult to tell," said Joseph J. Doyle Jr., a professor of management and applied economics at Massachusetts Institute of Technology and faculty director of MIT’s Sloan Initiative for Health Systems Innovation.

But other experts said Ryan’s claim is essentially on target, given the common understanding of what waste means.

One of them, Malcolm Sparrow, a professor of the practice of public management at Harvard, said that in a general, non-technical sense, Ryan’s claim is accurate. He added that the audit protocols that Health and Human Services uses to produce the estimates are weak, "so the actual levels of overall waste, or overpayments, are undoubtedly much higher than these government estimates."

Finally, Joseph Antos, a Medicare expert at the conservative American Enterprise Institute, offered a different view. The real waste, he said, is not what is measured by the improper payment estimates, but Medicare providing services that aren’t necessary, or aren’t delivered well, such as poor follow-up after a patient is hospitalized, resulting in that patient having to return to the hospital.

Ryan said: "There is $50 billion a year wasted in the Medicare program."

The statement is correct in that in the past two years, the federal agency that administers Medicare reports that $52 billion and then $48.5 billion in "improper payments" were made  — ranging from payments made with bookkeeping errors to fraud. Ryan goes a bit too far in that some of those payments are underpayments and some were for payments in which there wasn’t sufficient documentation to determine whether the payment was improper.

On balance, we rate his statement Mostly True.

Share the Facts

2019-04-19 16:23:29 UTC

PolitiFact

5

1

7

PolitiFact Rating:

Mostly True

"There is $50 billion a year wasted in the Medicare program."

Tim Ryan

U.S. representative, D-Ohio, 2020 presidential candidate

https://www.wmur.com/article/conversation-with-the-candidate-with-tim-ryan-online-exclusive/27116742

In a town hall

Thursday, April 11, 2019

2019-04-11

Read More

info