Medicare and Medicaid accounted for $40 billion dollars in improper payments last year and the Medicaid program has been on the GAO’s High Risk List since 2003 due to inadequate fiscal oversight. However, last month CMS announced that the agency achieved the lowest improper payment reduction rate for the programs in 8 years. This makes 2018 the second consecutive year that the rate has been below the 10% threshold following the compliance efforts established in the Improper Payments Elimination and Recovery Act of 2010.

Leading up to this point, CMS has made a concentrated effort to reduce improper payments by focusing on claims identification, reporting, and technology solutions that address payment error vulnerabilities.

CMS Administrator Seema Verma stated, Our accomplishments over the past year were the result of a focused effort to target root causes of improper payments. CMS also implemented a targeted review strategy that focused on provider education, assistance and burden reduction. The agency’s actions emphasized prevention-oriented activities.”

Defining and understanding this wasteful spending is a focal point for effective oversight according to the administrator. She acknowledges that not all improper payments are fraud but that these payments fail to “meet statutory, regulatory, administrative or other legally applicable requirements.”

CMS determined that the decreased rate was a result of their targeted review strategy that concentrates on provider education, assistance, burden reduction, and prevention activities that simplify and clarify policy. In addition, the agency also promotes the implementation of innovative solutions from the private sector that will combat improper payments and assist Medicaid and Medicare providers.

Despite the success, the agency is looking to reduce the rate even further. Verma says, “While we have made progress on reducing the improper payments rate, we are not satisfied and more work needs to be done to achieve increased and consistent reductions in the future by implementing already existing initiatives as well as innovative processes.”


The vast majority of improper payments occur in government-funded health care systems due to antiquated data systems and methodologies. Specifically, the data used by the federal government to detect overpayments and fraud is unreliable.

In 2012, HHS Regional Inspector General Ann Maxwell stated, “… much of the data used to identify improper payments and fraud is not current, available, complete, [or] accurate.”

Within Medicaid, the coordination of benefits and determining who is responsible for a claim is complex. It requires timely data and the use of multiple data sources. Additionally, eligibility data is uncoordinated between federal and state systems and it is often not accurate.


On a legislative level, Congress made efforts to address improper payments with the introduction of the Improper Payments Elimination and Recovery Improvement Act of 2012 and the Fraud Reduction and Data Analytics Act of 2015. However, without reliable, complete, and accurate data, Medicaid will continue to make payments in error.

Additional efforts to combat Medicaid’s improper payments are emerging from the private sector.  Syrtis Solutions (Syrtis) has introduced a technology-based solution to aid the program in identifying third party liability (TPL) before medical and pharmacy claims are paid improperly. We discovered that Medicaid’s traditional TPL discovery processes’ are primarily retrospective and fail to capture 13.4% of individuals who have unreported primary commercial coverage. As a result, Medicaid loses billions in improper claims payments; consequently, inefficient post-payment recovery processes are used to recoup the improper payments. To make matters worse, these post-payment recovery efforts only recover less than $0.20 on the dollar.

CMS’s announcement in November was a significant achievement in light of the high rate of improper payments within government-funded programs. For the first time in history, improper payment reduction rates were reported for Medicare, Medicaid, and the Children’s Health Insurance Program. While Congress and federal agencies are working to keep the momentum by implementing legislation and prevention activities, the private sector is also developing innovative solutions to reduce waste and help these programs operate more effectively.

To learn more about Syrtis Solutions, click here.