Keep Factually independent
Whether you agree or disagree with our analysis, these conversations matter for democracy. We don't take money from political groups - even a $5 donation helps us keep it that way.
Fact check: What is the latest official estimate of annual Medicaid fraud in the US (year 2023)?
Executive Summary
The federal government’s latest official measure for Medicaid “improper payments” in Fiscal Year 2023 is an 8.58% improper payment rate equal to $50.3 billion, but federal agencies and auditors emphasize that this figure is not a direct estimate of fraud and that most of those improper payments arose from insufficient documentation rather than intentional wrongdoing [1]. Subsequent reporting and oversight through 2024–2025 show lower improper-payment estimates and underscore methodological limits: recent analyses report a national improper payment rate decline and continuing distinction between documentation errors and fraudulent activity, meaning there is no single, accepted official dollar estimate of “annual Medicaid fraud” for 2023 [2] [3].
1. What advocates and agencies actually claim — the headline number that circulates
Federal summaries released for FY2023 present $50.3 billion in Medicaid improper payments, which CMS quantifies as an 8.58% improper-payment rate for the program; this figure has become the commonly cited “cost” associated with Medicaid payment problems [1]. The CMS fact sheet and associated reporting specify that roughly 82% of those improper payments were attributed to insufficient documentation, a category that includes clerical errors, missing records, and administrative noncompliance rather than explicit evidence of fraud or abuse [1]. Oversight offices and commentators frequently repeat the dollar figure while warning that the improper-payment metric combines many types of noncompliance and therefore should not be interpreted as an estimate of intentional fraud [1].
2. What auditors and watchdogs add — nuance and gaps in the official accounting
The HHS Office of Inspector General and the Government Accountability Office have identified areas where improper payments arise from program structure or measurement gaps rather than provider deceit; for example, an OIG audit found states paid over $249 million in capitation on behalf of deceased enrollees in some instances, which is improper but not necessarily criminal [4]. The GAO has highlighted that the Medicaid managed-care improper payment estimate omits downstream payments from managed-care plans to providers and therefore understates certain integrity risks, including services not delivered or lacking documentation [5]. These oversight reports emphasize that measurement limitations and program complexity make a clean “fraud” number impossible to extract from the improper-payment estimates alone [4] [5].
3. Later updates and trend signals — reported declines and continuing documentation problems
More recent summaries and analyses through early 2025 show a decline in reported improper-payment rates in Medicaid; some reporting notes a national improper payment rate around 5.09% in 2024, with a large share of remaining improper payments still attributed to insufficient documentation rather than confirmed fraud [2]. Analysts interpret the decline as an indicator of improved state administrative performance or changes in measurement rather than a verified drop in criminal activity. The persistence of documentation-driven improper payments across years underscores that administrative fixes, auditing practices, and better recordkeeping remain primary levers for lowering the improper-payment total [2] [3].
4. Why improper payments are not the same as fraud — methodological and legal distinctions
The Improper Payments Information Act requires agencies to estimate improper payments but explicitly does not compel agencies to produce a fraud estimate; federal commentators and watchdogs caution that improper payment totals conflate clerical errors, eligibility mistakes, system issues, and fraud, and thus cannot serve as a reliable measure of criminal activity [3] [2]. CMS itself and oversight reports repeatedly note that insufficient documentation — the largest driver in FY2023 — is not prima facie evidence of fraudulent intent, and that separate investigations, prosecutions, and recoveries are needed to quantify confirmed fraud losses [1]. The result is an official universe of improper payments but no single, authoritative annual fraud dollar estimate for Medicaid in 2023.
5. Practical takeaway and what to watch next — accountability, audits, and reporting changes
For policymakers, enforcement groups, and the public, the practical implication is that the $50.3 billion FY2023 improper-payment headline is the most recent federal aggregate for program integrity concerns, but it should be treated as an administrative error metric, not a fraud tally [1]. Oversight bodies continue to press CMS and states to improve documentation, close managed-care measurement gaps, and target recoveries where fraud is substantiated, and GAO/OIG audits through 2024–2025 signal these are active priorities [5] [4]. If you need an estimate of confirmed fraud specifically, rely on OIG criminal and civil enforcement reports and state audits that separately report recoveries and prosecutions; however, those figures will be far smaller and fragmented compared with the improper-payment totals [4] [2].