#improperpayments

Across the United States, Medicaid has become a significant financial concern for state governments. What was once a safety net program is now consuming nearly a third of state budgets, forcing lawmakers to reckon with rising costs and inefficiencies. Medicaid expansion, prolonged enrollment protections, and pandemic-driven increases have pushed participation to historic highs, and with it, the cost to maintain the program has ballooned.

Now, facing mounting deficits and a shifting policy environment, states are acting decisively to get Medicaid spending under control.

IMPROPER PAYMENTS FUEL THE SPENDING SURGE

A significant source of Medicaid’s financial pressure lies in its high rate of improper payments. In fiscal year 2023 alone, the Centers for Medicare & Medicaid Services (CMS) reported over $50 billion in payments that shouldn't have happened, most tied to missing or unverifiable eligibility documentation.

Cumulatively, improper Medicaid payments have cost taxpayers over $543 billion in the past decade. These aren’t just accounting errors—they reflect deep operational flaws that make the program vulnerable to waste, abuse, and fraud.

POLICYMAKERS LAUNCH INTEGRITY INITIATIVES

In response, several states are deploying tough new policies to restore program integrity and weed out inefficiencies:

Indiana has ended self-attestation for Medicaid eligibility and now mandates ongoing cross-checks against federal and state databases. The state has also implemented quarterly reporting on fraud prevention and payment accuracy.

Texas has upgraded its eligibility verification systems to include IRS and third-party data checks, automating what were previously manual processes.

Florida and Missouri are conducting more frequent eligibility redeterminations and increasing scrutiny of Medicaid Managed Care Organizations (MCOs).

Arkansas and Georgia are utilizing data-driven redetermination strategies to streamline enrollment and prevent ongoing eligibility lapses.

States are no longer waiting for federal intervention. They’re proactively tightening controls to reduce errors, cut unnecessary costs, and better target assistance.

MODERN TECH: THE MISSING PIECE IN MEDICAID REFORM

While legislative reforms are a step in the right direction, they won’t succeed without modern infrastructure to support them. Technology is key to implementing oversight at scale, in real time.

That’s why more Medicaid plans are turning to platforms like ProTPL from Syrtis Solutions.

ProTPL is a real-time, automated system that identifies third-party liability (TPL) before Medicaid pays a claim—ensuring Medicaid acts as the payer of last resort. It enables state plans to:

Block improper payments before they happen, rather than recovering them later,

Automatically detect commercial coverage on pharmacy and medical claims,

Reduce manual eligibility checks to improve efficiency and accuracy.

Comply with federal cost avoidance and COB mandates with minimal effort.

ProTPL enables Medicaid plans to respond more quickly, operate more efficiently, and prevent losses at the source.

THE PATH FORWARD: STRONG POLICY + SMART TECHNOLOGY

As the fiscal burden of Medicaid grows heavier, one thing is clear: status quo systems won’t cut it. States that combine aggressive policy reform with smart, proven technology will be best positioned to rein in spending, reduce fraud, and protect coverage for the people who need it most.

Over the past ten years, Medicaid has turned into one of the fastest and largest growing items on state budgets. In 2015, the program made up 20 percent of state budget spending and in 2018 it had increased to 30 percent. Last month, a report from the Foundation of Government Accountability discovered that Medicaid had cost states over $603 billion in 2018. Moving forward states need to ensure eligibility and address fraud, waste, and abuse in the Medicaid program to lower costs and preserve the program's resources.

The FGA explains that "ultimately, this means fewer dollars are available for education, corrections, transportation, and other important budget priorities." For example, as Medicaid has expanded, state education spending has dropped by 13 percent and items outside of core budget items have decreased by 12 percent.

In Ohio, Missouri, and Pennsylvania, Medicaid spending has reached as high as 40 percent of their budgets.

The report reveals that in Ohio, Medicaid spending has grown 260 percent in eighteen years. In 2000, its Medicaid budget made up 19 percent ($7.3 billion) of the entire budget. Nine years later, it climbed to 24 percent ($14 billion) and in 2018 it's grown to 38 percent ($27 billion). That is more than the state's entire general revenue in 2000.

Likewise, Louisiana spent $3.4 billion on Medicaid in 2000 and by 2009 it virtually doubled to $6.2 billion. Three years after program expansion under the Affordable Care Act, Louisiana's Medicaid budget grew again to over $11 billion in 2018. At the moment, Medicaid spending in the state sits at 35 percent of the budget. The report cites Medicaid expansion as part of the problem stating it "has blown the lid off of every state and third-party cost and enrollment projection."

The FGA estimates that in the next decade Medicaid spending will exceed more than $1 trillion per year.

Nicholas Horton is the author of the report and research director at the FGA. He stated, "States are watching their Medicaid spending climb to extraordinary levels. Hopefully, state leaders will continue to recognize the need to rein in their Medicaid programs and implement commonsense reforms like work requirements and Medicaid expansion enrollment freezes."

The study also includes suggestions geared towards preserving Medicaid's integrity and freeing up resources for other important budget items. One of which is to implement work requirements for non-disabled adults enrolled in Medicaid. The FGA points out that there is evidence that this would aid recipients in becoming more self-sufficient and less dependent on the state.

Groups in opposition to work requirements, like the Center on Budget and Policy Priorities (CBPP), contend that they would limit the access to care for people who rely on it.

According to the CBPP, "State proposals for Medicaid work requirements will cause many low-income adults to lose health coverage, including people who are working or are unable to work due to mental illness, opioid or other substance use disorders, or serious chronic physical conditions, but who can not overcome various bureaucratic hurdles to document that they either meet work requirements or qualify for an exemption from them."

Apart from work requirements, the report also recommended that states make a concentrated effort to deal with fraud. The National Bureau of Economic Research found that more than 500,000 people enrolled in the program as a result of expansion were ineligible because of their income. The study also mentioned that the states analyzed only represented 25 percent of the 37 states to expand Medicaid and that the number of ineligible members could be as much as three times higher.

Improper payments have also been an enormous cost to the program in the last ten years. In the FY 2018 HHS Agency Financial Report the department discovered that Medicaid improper payments totaled $36.25 billion. DHHS highly recommended implementing IT solutions at the state level to deal with the waste. They feel that by making use of technology solutions, Medicaid will have a more complete data structure and improved oversight.

The Medicaid program is costing states billions of dollars every year and over the next decade, that figure will climb to $1 trillion. As it expands, it is also pulling away from other necessary budget items such as education, infrastructure, transportation, and corrections. To remain fiscally solvent while providing healthcare to low-income people, state officials and plan administrators must implement reform and present-day technology solutions.