CMS estimates that 77% of fiscal year 2025 Medicaid improper payments resulted from insufficient documentation rather than fraud or abuse, according to an Oct. 7 report from the Congressional Research Service.
The report outlines how federal and state agencies oversee Medicaid program integrity. CRS is a nonpartisan agency within the Library of Congress that prepares policy and legal analysis for lawmakers and committees in both parties.
Federal regulations define an improper payment as any payment that should not have been made or was made in the wrong amount, including both overpayments and underpayments, according to the report. One example of insufficient documentation is a provider failing to submit records for a service delivered to an eligible enrollee. CMS measures these payments through its Payment Error Rate Measurement program.
The total amount of Medicaid fraud is unknown, the report said. State Medicaid fraud control units reported recovering $2 billion from criminal and civil cases in fiscal year 2025. CMS said integrity work across Medicaid and the Children’s Health Insurance Program saved the federal government $1.5 billion in fiscal year 2024.
Medicaid covered an estimated 85 million people in fiscal year 2024 at a cost of about $949 billion. Each state runs its own program within federal parameters. CMS, HHS’ Office of Inspector General and the Justice Department share federal oversight. States are required to screen providers, operate fraud control units and contract with recovery audit contractors to identify underpayments and overpayments and recoup overpayments.
Strengthening Medicaid program integrity is on the Government Accountability Office’s most recent High Risk List, released in February 2025, which flags federal programs vulnerable to waste, fraud, abuse or mismanagement.
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