How Vast Are Improper Medicaid Payments?

The application of sophisticated data analytics to the federal/state Medicaid program is producing some breathtaking improper payment numbers:

https://epicforamerica.org/education-workforce-retirement/medicaids-true-improper-payments-double-those-reported/

https://thefga.org/research/budget-crisis-three-parts-obamacare-bankrupting-taxpayers/

https://substack.com/inbox/post/158245697

New Data-Driven Analysis Shows Improper Payments Likely Far Worse Than Even DOGE claims
Two scholars dig into Medicaid payment records and find it's worse, much worse, than you thought
By Mark Tapscott - March 06, 2025

It didn’t take the Department of Government Efficiency (DOGE) whiz kids long to come up with an estimate of how many tax dollars have been lost due to federal bureaucrats sending checks to Medicare and Medicaid beneficiaries and contractors.

The official estimate from DOGE is $2.7 trillion being lost since 2003. That figure represents losses from improper payments made by both programs, which represent two of the top three most costly federal entitlement programs.

According to federal spending data, Social Security tops that list at $1.3 trillion annually, followed by Medicare at $848 billion and Medicaid at $805 billion, for a total of just less than $3 trillion annually. But the situation may actually be even worse than indicated by DOGE.

That’s according to Rachel Greszler and Brian Blase of the Economic Policy Innovation Center (EPIC), who dug into the numbers and came away convinced the DOGE estimates are way off, based on their analysis of 10 years worth of Medicaid spending data.

Note that the DOGE estimate for Medicare and Medicaid covers more than two decades of spending data. These two programs, the second and third largest of all federal entitlement programs, are both administered through the Centers for Medicare and Medicaid (CMS) in the Department of Health and Human Services (HHS).

Officially, Medicaid issued $543 billion in improper payments from 2015 to 2024, but the actual total is almost certainly double that amount, Greszler and Blase contend. That’s because, they explain, "the Obama and Biden administrations excluded eligibility checks in their audits of improper payments in Medicaid—the so-called PERM (Payment Error Rate Measurement) audits. We estimate that the true amount of improper payments in Medicaid is twice as high as reported."

Even in years when the eligibility audits were conducted — 2019 and 2020 for the decade examined by Greszler and Blase — only one-third of all state Medicaid programs are subjected to the PERM process. Officially, for 2019 and 2020, CMS estimated that 26.2 and 27.5 percent, respectively, of all Medicaid payments in those year went to improper beneficiaries.

In 2015, the official estimate by CMS for improper payments under Medicaid was $29 billion. The Greszler and Blase projection puts the improper payments total for that year at nearly $75 billion.

Similarly, in 2017, the official estimate was nearly $37 billion, while the Greszler and Blase projection for that year is nearly $91 billion. More recently, the figures for 2023 are $50 billion and almost $147 billion, and $31 billion and nearly $153 billion in 2024.

The absence of the eligibility checks of state Medicaid enrollments in all but two years between 2015 and 2024 meant more payments than “normal” were made on behalf of ineligible beneficiaries due to two problems:

First, Greszler and Blase explain, because under the Affordable Care Act (i.e. Obamacare), a new category of working age, able-bodied and mostly childless beneficiaries was added to Medicaid.

Whereas the federal government reimburses between 50 and 75 percent of state costs for other beneficiaries, the new category includes 90 to 100 percent reimbursement, beginning in 2018.

Second, the government's expedited Hospital Presumptive Eligibility policy "permits hospitals to enroll people into Medicaid based on only a few questions about income and household size, and without verification of their answers. People receive temporary Medicaid coverage pending a review," the authors write.

A 2018 study by the Foundation for Government Accountability found that 70 percent of people deemed eligible by hospitals were eventually determined ineligible or did not ultimately have their information verified, according to Glaszer and Blase.

A high percentage of Medicaid reimbursements go to health insurers, not to individual beneficiaries, because the vast majority of the latter are covered by managed care plans.

Hard to believe as it may be, both DOGE and Greszler and Blase may be underestimating the true extent of the improper payments being made every year through the Medicaid program.

During a February 12 hearing of the House DOGE Subcommittee chaired by Rep. Marjorie Taylor Greene (R-GA.), a former FBI anti-fraud expert shared some shocking information about the true extent of Medicaid improper payments.

Stewart Whitson, the former FBI special agent who is now the senior director of federal affairs for the Foundation for Government Accountability, argued that Medicaid accounts for as much 20 percent of all federal government improper payments in recent years

“Improper spending in Medicaid alone is on track to cost more than $1 trillion over the next 10 years. More than 80 percent of Medicaid improper payments are due to eligibility errors,” Whitson told the hearing.

Think about what Whitson said - four out of five Medicaid payments every year are going to the wrong recipient or shouldn’t be made at all.

No wonder Rep. Pete Sessions (R-Texas) will convene another hearing on March 11, this one of the House Oversight and Accountability Committee Subcommittee on Government Operations, that will focus on improper payments.

Emphasis will be on shifting government actions from recovering improper payments to preventing them in the first place. Sessions is Chairman of the subcommittee as well as co-chairman of the House DOGE Caucus.