How Does the Government Account for $125 Billion (With a 'B') in Improper Payments?

This is a rush transcript from "On the Record," April 18, 2011. This copy may not be in its final form and may be updated.

GRETA VAN SUSTEREN, FOX NEWS HOST: All right, if you pay taxes, you won't like this one! The federal government just doled out a lot of your money in improper payments. According to the Government Accountability Office, in just 2010, the improper payments by your federal government was $125 billion. Now, the $125 billion in improper payments -- just 2010. So how did this happen?

Earlier today, Congressman Darrell Issa went "On the Record."


VAN SUSTEREN: Congressman, nice to see you, sir.

REP. DARRELL ISSA, R-CALIF., OVERSIGHT COMMITTEE CHAIRMAN: Well, thanks for having me on, Greta. Good to be back.

VAN SUSTEREN: All right. Congressman, I almost exploded on Friday when I learned that before your committee, the GEO -- GAO, rather, testified that in fiscal year 2010, there was just over $125 billion in improper payments -- billion dollars. What are we going to do about that?

ISSA: Well, what we're doing about it is we're mandating the kind of proactive technology, XPRL, and other standards so that the government will have a better ability to search. And Earl Devaney is giving us probably the only really good thing to come out of stimulus. He's giving us proof of concept that, in fact, we can proactively go after waste, fraud and abuse, but particularly, payments that are inconsistent with the law, in real time, the way Visa and Mastercard have for years.

VAN SUSTEREN: All right, well, who did this? Somebody did these improper payments. I mean, are we even zeroing in on the culprits within the government? Is there any effort to find them, you know, to make them either do their jobs or get rid of them?

ISSA: Well, Greta, as you can imagine, Medicare, Medicaid represent the largest amount of improper payments because there you're dealing with the ability for frauds or for legitimate doctors or hospitals to make requests that are simply improper and still get them paid. There's very little double checking. One of the problems with our health care delivery in Medicare and Medicaid is it gives away a lot of money, it does very little oversight over that money being properly spent.

VAN SUSTEREN: All right, $125 billion -- I mean, last week, the last two weeks, the congressmen and the Senate -- the House and Senate have been fighting over $38 billion. This is $125 billion just for fiscal year 2010. Have we recovered any of this money?

ISSA: Very little, Greta. The -- the fact is that by the time you go and do the forensics, often it's very difficult. And even when you go to do it, sometimes it ends up being an agreed-on amount less. But more importantly, health care providers and others are, in fact, in doubt as to whether or not they're billing correctly regularly.

So can we do it better? Yes. GAO very much made it clear that if we were to put hundreds of millions or even a billion dollars into state-of- the-art, forensic real-time assessment and real-time assessment, it would pay for itself in a matter of days or weeks. That's why we've got to start looking at putting the systems in that actually deliver savings. And we haven't done that for a long time. And this year's budget, even though I approve of the cuts that were in, it cut a couple of areas that I would not have done. It cuts a couple of the areas of transparency that we really need to make sure we have more of, not less of.

VAN SUSTEREN: You know, Congressman, you're so measured in talking about this, and you know, this is absolutely pure insanity on the part of our federal government. And we're just talking about 2010. We're not talking about 20 -- we're not talking about '09, '08, '07, all the other years. You know, there are so many demands made on Americans in terms of whether it's taxes or they're hearing spending cuts on programs. And then we -- then we hear that $125 billion -- we don't even -- that's just one year, and we have no idea where to find it. So it -- this really has gotten -- it -- it really is -- it's insane. And even within this own report, it says that the government is the steward of taxpayer dollars. Instead, it looks like they're the thief because they -- I mean, the money's just taken and thrown away and unaccounted for and wasted!

ISSA: Well, you're absolutely right about one thing, and that is that government does a great job of saying they are stewards of the taxpayers' money. Well, there's really no built-in incentives to have these kinds of savings. It's one of the changes that has to happen. We've got to not only crank down the screws on how much agencies get in the way of money, but we've got to find ways to actually let them invest in less wasteful spending and use some of that money to invest again in better forensics and so on. Right now, that's a problem government-wide. But part of the reason, Greta...

VAN SUSTEREN: It's a crisis! It's not just a problem, it's a crisis! It's improper payments! I mean, it's -- it's an absolute unadulterated crisis going on! It's taking money that taxpayers have given and just throwing it away and not looking for it!

ISSA: Greta, one of the amazing things is, we -- some of the people that are the worst abusers are repeat abusers. So the government improperly pays to them, they get shut off, they form a new entity and they do the same thing again and again. It is a problem of government. It's one that's not going to go away until we fundamentally change the incentives in government, including the real reform of Medicare and Medicaid, which has been too much about how much money they give out and not enough about whether or not the procedure actually occurred, and if it occurred, was it actually necessary?

VAN SUSTEREN: A quick question. What are you doing in Palo Alto?

ISSA: Well, you know, the outreach around America that members of the government Oversight and Reform Committee are doing broadly includes here in high-tech. Most people think about the high-tech community and say, Well, you know, regulations don't affect them. But lots of bad policies in America are affecting job creation, even here in Silicon Valley, including an H1-B program that's broken, that doesn't allow enough of the best and the brightest to stay here and innovate, that's causing innovations to go on around the world, trillions of dollars that are trapped overseas because of our tax and repatriation policies, and loads of much simpler ones.

You know, one of them that one of our companies out here told us about was very simple. They cannot bury fiber. They can't get access to put new fiber in to increase the speed and capability to your home and business of the Internet because of a load of different regulations that were not designed to allow more competition, but in fact, help block it. So those kinds of things are what we're listening to out here and taking back to Washington. And you don't get the same story when you're here that you really think you get in Washington.

VAN SUSTEREN: Well, Congressman, nice to hear -- thank you for joining us. And nice to hear from you. And I look forward to more of your hearings on waste and fraud. Thank you, sir.

ISSA: Thanks, Greta. We'll do it.