CMS estimated $28.83 billion in improper payments for Medicare fee for service in fiscal 2025. Compared to 2024 reporting, that value is down from $31.7 billion.
The agency said improper payment reporting programs are intended to promote integrity, but “improper payment measurement is not a measure of fraud, and not all improper payments are attributable to fraud or abuse,” the agency said in a Jan. 15 news release. Instead, these improper payments do not meet CMS requirements, and can be overpayments, underpayments or payments with insufficient information.
Incorrect payments sometimes result from missed administrative steps, CMS added.
Here are four things to know from 2025 on these payment issues:
1. The improper payment rate for Medicare fee for service was 6.55%, down from 7.66% in fiscal 2024. CMS said the 10% compliance threshold has been met for the past nine years.
2. The rate of improper payments was up for Medicare Part C, estimated to be 6.09% versus 5.61% in 2024. Improper payments mainly stemmed from Medicare Advantage organizations not providing sufficient documentation to support beneficiary diagnosis data, CMS said.
3. The improper payment rate Medicare Part D was 4% in fiscal 2025, up from 3.7% the previous year.
4. More than 77% of Medicaid and 56% of Children’s Health Insurance Program improper payments resulted from insufficient documentation, rarely indicating abuse, the release said. CMS said Medicaid and CHIP changes could reflect the unwinding of COVID-era flexibilities.
At the Becker's 11th Annual IT + Revenue Cycle Conference: The Future of AI & Digital Health, taking place September 14–17 in Chicago, healthcare executives and digital leaders from across the country will come together to explore how AI, interoperability, cybersecurity, and revenue cycle innovation are transforming care delivery, strengthening financial performance, and driving the next era of digital health. Apply for complimentary registration now.
