GAO: Medicare spent $48 billion on improper fee-for-service payments

The federal government spent nearly $48 billion on improper Medicare payments in 2010 according to a new report from the Government Accountability Office. The report was released just prior to a House Oversight Committee hearing on government efficiency.

Medicare's large size makes it ripe for unsavory billing practices, federal watchdogs noted in the report. Still, the total amount of money wasted on improper payments exceeds spending on any government program. Investigators found that the $48 billion is attributable to Medicare fee-for-service programs, which include Part A and Part B. Part A covers skilled nursing facility and hospital stays, while Part B covers hospital outpatient, rehabilitation, physician and other services. The improper payment rate for Medicare Advantage — the program with which recipients receive benefits through private plans — was even higher than Part A and B, at 14.1%.

During the hearing, officials from the Department of Health and Human Services touted the agency's efforts to lower improper fee-for-service payment rates. The agency lowered error rates for fee-for-service billing for physicians and hospitals from 12.4% in 2009 to 10.5% in 2010, according to the report.