What is the total cost of fraud, waste and abuse in the Medcaid system

1. What the official federal numbers actually measure — and what they don’t

CMS’s Fiscal Year 2024 improper payments fact sheet reports a Medicaid improper payment rate of 5.09%, equal to $31.10 billion, and explicitly notes roughly 79% of those improper payments resulted from insufficient documentation rather than proven fraud or abuse ^[1]. The Government Accountability Office (GAO) similarly groups Medicare and Medicaid improper payments together and cites HHS estimates of “over $100 billion” in combined improper payments for 2023, underscoring that improper payment totals encompass paperwork errors and eligibility issues as well as potential fraud ^[5].

2. Much larger independent estimates rest on different definitions and time windows

Several outside organizations calculate far larger totals by widening the scope beyond CMS’s PERM‑style improper payment accounting and by aggregating over multiple years. Examples include Paragon’s estimate of about $1.1 trillion in improper Medicaid payments over the past decade and other analyses that put decade totals near $1.1–$1.2 trillion ^{[2] [4]}. Industry or advocacy pieces sometimes aggregate historical settlements, estimated overpayments, and projected misclassification errors to reach these higher numbers ^{[3] [6]}.

3. Why estimates diverge: methodology, scope, and intent

Sources differ because they count different things. CMS and GAO report annual “improper payments” based on audit samples and emphasize documentation and procedural errors ^{[1] [5]}. Independent analysts may include broader categories — eligibility misclassification, projected overpayments from managed‑care arrangements, multiyear accumulations, and assumptions about undetected fraud — producing larger decade‑long totals ^{[2] [6]}. Some organizations advocating for policy change use high estimates to justify reforms; other advocacy groups argue those figures are exaggerated and warn cuts will strip coverage from millions ^{[7] [8]}.

4. What portion is likely criminal fraud versus administrative error

Available federal reporting makes clear that most improper payments are not proven criminal fraud. CMS reports the majority of Medicaid improper payments arise from insufficient documentation, and CBPP and GAO reporting emphasize that improper payment rates “do not necessarily indicate fraud or abuse” ^{[1] [9] [5]}. Where criminal fraud exists, state Medicaid Fraud Control Units and federal enforcement sometimes recover funds, but those recovered amounts are small relative to headline improper‑payment figures ^[10].

5. Political and policy uses of the numbers — and the counterarguments

Politicians and advocacy groups on both sides use these figures to support divergent agendas. Proposals to cut federal Medicaid funding have invoked claims that huge sums could be saved by eliminating waste, fraud, and abuse, but Georgetown’s Center for Children and Families and other analysts caution that even large reductions in improper payments could not absorb multi‑hundred‑billion dollar proposed cuts without harming coverage ^{[11] [8]}. Conversely, some commentators argue privatization or managed‑care overpayments inflate costs and that reclaiming those expenditures could yield large savings — claims that rely on projections and contested assumptions ^[6].

6. What to use as a defensible headline number

For a single, conservative, defensible annual figure based on federal audits, cite CMS: $31.10 billion in Medicaid improper payments in 2024 (5.09%), with most attributable to documentation errors not proven fraud ^[1]. If discussing cumulative or systemic estimates over a decade, note that independent analyses place improper Medicaid payments in the roughly $1.0–$1.2 trillion range but that those totals use broader methods and include categories not counted in CMS’s annual improper‑payment audits ^{[2] [4] [3]}.

7. Bottom line for readers and policymakers

Available sources show there is meaningful improper spending in Medicaid, but they disagree sharply on scale depending on definitions and time frames. Policymakers should distinguish between (a) audited annual improper payments (CMS/GAO) and (b) broader, multi‑year or model‑based estimates used to argue for structural reforms (Paragon, industry reports). Cutting benefits based on the larger estimates risks shifting coverage and costs unless reforms are carefully targeted — a point emphasized by advocacy groups warning of large coverage losses from steep cuts ^{[1] [7] [8]}.