There’s been a great deal of talk in Washington D.C. about the potential for reducing Medicaid spending by addressing fraud.

The unfortunate linking of the negative triad of “fraud, waste and abuse” has long been leveled at any number of government programs, but a new brief written by KFF (formerly known as the Kaiser Family Foundation), explains that, in the case of Medicaid at least, there’s far more complexity to the issue of fraud than may appear.

According to the KFF report, “On March 11, 2025, the White House released a statement saying most federal spending lost to fraud is from entitlement programs such as Medicaid and Medicare, citing “improper payment” estimates, without clarifying (as GAO does) that “improper payments” are not a measure of fraud or abuse and most improper payments are the result of missing documentation or missing administrative steps and are not necessarily payments made for ineligible enrollees or services.”

As KFF explains, most of the improper payments were attributable to issues such as “state failure to document beneficiary eligibility or to appropriately screen enrolled providers or medical records not submitted or missing required documentation to support the medical necessity of a claim.”

As the report explains, improper payments include “beneficiaries who were ineligible or were eligible but received a service that was not covered (15.6%), for providers not enrolled in the program (2.0%), and other monetary losses (3.3%).

In terms of eligibility, in 2024, the Centers for Medicare and Medicaid services (CMS) finalized rules “that included guidance for states on eligibility documentation procedures to reduce ‘paperwork’ errors that lead to the majority of eligibility-related improper payments. Specifically, the rule requires records to be kept in electronic format for the entire period the case is active and for at least three years after and identifies the information that must be included in all case records”. 

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