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At a time when the Obama Administration is working to cut healthcare costs and crack down on fraud, the government agency responsible for much of that work is bracing for a 20 percent staff cut compared to last year.

The Office of Inspector General at the U.S. Department of Health and Human Services is in charge of tracking down payment errors and fraud. The agency found $6.9 billion dollars that should be recovered, mostly on behalf of Medicare and Medicaid programs, for the 2012 fiscal year. But the group is not immune from federal budget cuts.

Tony LoSasso is a health economist at the University of Illinois at Chicago. Until recently, he says the government followed an inefficient “pay-then-chase” model for catching fraud.

“They write checks,” he says. “And then they look and see, ‘Well, we shouldn’t have paid this, now let’s go try to chase them down.’” LoSasso says the agency has been moving toward trying to find red flags before cutting a check.

But now, the Office of Inspector General is under a hiring freeze, and officials say 1,200 fraud complaints went unresolved last year because of a lack of resources. LoSasso worries fewer “boots on the ground” will mean more fraud.

“That’s pure loss to taxpayers; that’s money that could and should be spent on other services -- legitimate services,” LoSasso says.

Services, like better health care.

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