CMS estimated there were $28.83 billion in improper payments for Medicare fee for service in fiscal 2025. Compared to 2024 reporting, that value is down from $31.7 billion.
“While CMS’ improper payment reporting programs are designed to protect the integrity of CMS programs, improper payment measurement is not a measure of fraud, and not all improper payments are attributable to fraud or abuse,” the agency said in Jan. 15 news release. “Rather, it is important to understand that improper payments are payments that do not meet CMS program payment requirements. They can be overpayments, underpayments or payments where insufficient information was provided to determine whether a payment was proper.”
Incorrect payments sometimes result from a missed administrative step, CMS added.
Here are four things to know from 2025 on these payment issues:
1. The improper payment rate for Medicare fee for service was 6.55%, down from 7.66% in fiscal 2024. CMS said the 10% compliance threshold has been met for the past nine years.
2. The rate of improper payments was up for Medicare Part C, estimated to be 6.09% versus 5.61% in 2024. Improper payments mainly stemmed from Medicare Advantage organizations not providing sufficient documentation to support beneficiary diagnosis data, CMS said.
3. The improper payment rate Medicare Part D was 4% in fiscal 2025, up from 3.7% the previous year.
4. More than 77% of Medicaid and 56% of Children’s Health Insurance Program improper payments resulted from insufficient documentation, rarely indicating abuse, the release said. CMS said Medicaid and CHIP changes could reflect the unwinding of COVID-era flexibilities.
