Centers for Medicare & Medicaid Services (CMS) - Advance Premium Tax Credit (APTC)

High-priority program

Home > Agencies & Programs > Centers for Medicare & Medicaid Services (CMS) - Advance Premium Tax Credit (APTC)

Program level Payment Integrity results

Sponsoring agency: Department of Health and Human Services

Advance payments of the premium tax credit (APTC) provide financial assistance to Marketplace consumers by reducing their monthly insurance payments. The consumer's APTC is based on the estimated annual household income and household size reported on their Marketplace application. Overpayments identified resulted from the improper application of established policies and procedures. Overpayments mainly occurred due to the improper calculation of annual income amounts caused by not following guidelines, and acceptance of documentation that does not meet requirements to resolve data matching issues. There are also system issues that lead to overpayments, such as limits on functionality to process consumer provided data.

PROGRAM METRICS

$41,256 M

in FY 2022 outlays, with a

99.4%

payment accuracy rate

PROGRAM METRICS

$46,498 M

in FY 2023 outlays, with a

99.4%

payment accuracy rate

PROGRAM METRICS

$55,708 M

in FY 2024 outlays, with a

99.0%

payment accuracy rate

PROGRAM METRICS

$73,813 M

in FY 2025 outlays, with a

99.1%

payment accuracy rate

  • Improper payment estimates over time
    View as:

    Chart toggle amounts:
    Proper payments
    Overpayment
    Underpayment
    Technically improper
    Unknown

Payment Integrity results

  • FY 2022 improper payment estimates

    Chart legend and breakdown

    Payment accuracy rate

    Improper payment rate

    Unknown payment rate


    Sampling & estimation methodology details

    Sampling timeframe:

    01/2020 - 12/2020


    Confidence interval:

    95% to <100%


    Margin of error:

    +/-0.33

Overpayments

The overpayments identified under the EIPM program are considered to be within the agency's control because they resulted from the improper application of established policies and procedures. The majority of the overpayments identified resulted from the agency not following it's own guidance designed to help them complete their tasks. These actions include improper calculation of annual income amounts by not conducting those calculations in accordance with established guidelines and accepting documentation that does not meet requirements to resolve data matching issues. There are also system issues that lead to overpayments that can be addressed by the agency, such as limits on functionality to process data provided by consumers.
Overpayment root cause Overpayment amount
Amount of overpayments within the agency's control $236.07 M
Amount of overpayments that occurred because the data/information needed to validate payment accuracy prior to making a payment does not exist $0.0 M
The amount of overpayments that occurred because of an inability to access the data/information needed to validate payment accuracy prior to making a payment $0.0 M
The amount of overpayments that occurred because of a failure to access data/information needed to validate payment accuracy prior to making a payment $236.07 M

Overpayment root cause Overpayment amount
Amount of overpayments outside the agency's control $0 M

Underpayments

Underpayment root cause Underpayment amount
Amount of underpayments $19.69 M
The amount of underpayments that occurred because the data/information needed to validate payment accuracy prior to making a payment does not exist $0.0 M
The amount of underpayments that occurred because of an inability to access the data/information needed to validate payment accuracy prior to making a payment $0.0 M
The amount of underpayments that occurred because of a failure to access data/information needed to validate payment accuracy prior to making a payment $19.69 M

Technically improper payments

The amount of improper payments that were paid to the right recipient for the correct amount but were considered technically improper because of failure to follow statute or regulation $0.0 M

Additional information

$19.69 M

Unknown Payment Details

Evaluation of corrective actions

The planned and completed actions provide a number of corrective action plans designed to target the APTC error rate. Audits, automation, education, and risk models are all key corrective action plans to reduce the error rate and address the causes of improper payments.

Future payment integrity outlook

Centers for Medicare & Medicaid Services (CMS) - Advance Premium Tax Credit (APTC) has NOT established a baseline.

Out-Year improper payment and unknown payment projections and target
Current year +1 estimated future outlays $46,497.89 M
Current year +1 estimated future improper payment and unknown payment rate 0 %

The program's current year improper payment and unknown payment rate of 0.62 % may or may not be the tolerable rate. The agency has not yet determined the tolerable rate for this program.

Baseline has not been established.

The program is still trying to identify the improper payment rate below which further expenditures to reduce improper payments would cost more than the amount those expenditures would save

The CMS FY 2023 Justification of Estimates for Appropriations Committees includes funding requests for the agency's core responsibiities associated with the Exchanges. These include verifying eligibility data for financial assistance through the Exchanges or other health insurance programs (including Medicaid and the Children’s Health Insurance Program), and ensuring the proper payment of financial assistance in the form of APTC to issuers where an applicant is determined eligible. In order to meet these responsibilities, CMS sought funding for the Data Services Hub, which provides a query-based verification service with Federal entities and private data sources for information supplied by individuals during the application process. Verified data includes citizenship/immigration status, income, household size, and eligibility for Medicare, veteran’s benefits, or Federal employee benefits. When consumer-provided information does not match electronic data sources, data match inconsistencies are generated and CMS subsequently reviews consumer-submitted supporting documentation to resolve the issue. CMS also sought funding to support the back end functionality of the Federal Exchange including plan management, and the eligibility and enrollment processes.

Additional programmatic information

This year marks the first time CMS has measured the improper payment rate for the Federally-facilitated Exchange (FFE) program. CMS estimated the improper payment rate based on a review of a stratified random sample of applications to determine if the FFE properly performed the required eligibility determinations and paid the appropriate benefits for each sampled application. The FFE improper payment estimate does not reflect payments made by State-based Exchanges (SBEs). CMS continues to develop the SBEs improper payment measurement methodology and will continue to provide updates on the development status through its annual Agency Financial Report.

  • FY 2023 improper payment estimates

    Chart legend and breakdown

    Payment accuracy rate

    Improper payment rate

    Unknown payment rate


    Sampling & estimation methodology details

    Sampling timeframe:

    01/2021 - 12/2021


    Confidence interval:

    95% to <100%


    Margin of error:

    +/-0.4

  • Actions taken & planned to mitigate improper payments

    Mitigation strategy Description of the corrective action Completion date Status
    Automation
    HHS’s corrective actions include identifying and remediating system defects within the Exchanges that may impact APTC payments. These defects become known through various mechanisms, including internal quality control activities and external reviews of APTC eligibility determinations made by the Exchanges. HHS continually evaluates the policies and procedures that underlie the automated processes associated with APTC to identify and address weaknesses that may surface as they become operationalized. HHS also proactively improves its automated processes, e.g., the Verify Lawful Presence service with the Department of Homeland Security was upgraded to ensure more accurate and timely lawful presence verifications. HHS implemented process automation to reduce human error introduced during adjudication and processing of supporting documentation. HHS will continue to encourage and require that additional tasks be automated to further reduce manual errors and improve the accuracy and quality of required adjudication tasks.
    The corrective action was not fully completed this reporting period
    Not Completed
    Training
    All personnel undergo a rigorous training when onboarded to the workforce. They also receive annual refreshers and quick training lessons when program policy or operations are updated. Ad hoc training is added as additional training needs are identified. In FY2023, HHS conducted additional training sessions related to Data Matching Issues verifications, casework, and outreach.
    The corrective action was not fully completed this reporting period
    Not Completed
    Audit
    Both the automated and the manual processes of the Exchanges are subject to rigorous annual testing of key internal controls as required by Appendix C of OMB Circular A-123. External audits by OIG and GAO are another common mechanism that help to identify potential payment integrity risks within the Exchanges, specifically by evaluating APTC eligibility determinations made by the Exchanges within the context of federal statute and regulations.
    The corrective action was not fully completed this reporting period
    Not Completed
    Predictive Analytics
    The Marketplace Program Integrity Contractor implemented a risk model that incorporates many risk factors that may indicate potential fraud or misconduct by agents or brokers. The result is a risk profile and weighted risk score for each agent or broker. Those that pose the highest risk, based on weighted risk score, are prioritized for investigations. The risk profile is also leveraged as part of a prioritized investigation and significant discoveries may be used to inform interview questions or as supporting evidence in overall case findings. In FY23, there are 23 indicators in the Agent/Broker risk model.
    The corrective action was not fully completed this reporting period
    Not Completed
    Automation
    HHS’s corrective actions include identifying and remediating system defects within the Exchanges that may impact APTC payments. These defects become known through various mechanisms, including internal quality control activities and external reviews of APTC eligibility determinations made by the Exchanges. HHS continually evaluates the policies and procedures that underlie the automated processes associated with APTC to identify and address weaknesses that may surface as they become operationalized. HHS also proactively improves its automated processes, e.g., the Verify Lawful Presence service with the Department of Homeland Security was upgraded to ensure more accurate and timely lawful presence verifications. HHS implemented process automation to reduce human error introduced during adjudication and processing of supporting documentation. HHS will continue to encourage and require that additional tasks be automated to further reduce manual errors and improve the accuracy and quality of required adjudication tasks. HHS plans to continue these actions in FY 2024, but will not finalize this decision until the APTC Error Rate data analysis is complete.
    FY2027+
    Planned
    Training
    As part of Eligibility Support Contractor Education, personnel undergo thorough onboarding training, annual refreshers, and quick lessons for policy or operations updates. Ad- hoc training is provided as needed. HHS conducts extra training sessions for Data Matching Issues verifications, casework, and outreach. HHS plans to continue these actions in FY 2024, but will not finalize this decision until the APTC Error Rate data analysis is complete.
    FY2027+
    Planned
    Audit
    Both the automated and the manual processes of the Exchanges are subject to rigorous annual testing of key internal controls as required by Appendix C of OMB Circular A-123. External audits by OIG and GAO are another common mechanism that help to identify potential payment integrity risks within the Exchanges, specifically by evaluating APTC eligibility determinations made by the Exchanges within the context of federal statute and regulations. HHS plans to continue these actions in FY 2024, but will not finalize this decision until the APTC Error Rate data analysis is complete.
    FY2027+
    Planned
    Predictive Analytics
    The Marketplace Program Integrity Contractor implemented a risk model that incorporates many risk factors that may indicate potential fraud or misconduct by agents or brokers. The result is a risk profile and weighted risk score for each agent or broker. Those that pose the highest risk, based on weighted risk score, are prioritized for investigations. The risk profile is also leveraged as part of a prioritized investigation and significant discoveries may be used to inform interview questions or as supporting evidence in overall case findings. In FY23, there are 23 indicators in the A/B risk model. HHS plans to continue these actions in FY 2024, but will not finalize this decision until the APTC Error Rate data analysis is complete.
    FY2027+
    Planned

Overpayments

The overpayments identified under the Exchange Improper Payment Measurement (EIPM) program are considered to be within the agency's control because they resulted from the improper application of established policies and procedures. The majority of the overpayments identified resulted from the agency not following it's own guidance designed to help them complete their tasks. These actions include improper calculation of annual income amounts by not conducting those calculations in accordance with established guidelines and accepting documentation that does not meet requirements to resolve data matching issues. There are also system issues that lead to overpayments that can be addressed by the agency, such as limits on functionality to process data provided by consumers.
Overpayment root cause Overpayment amount
Amount of overpayments within the agency's control $260.73 M
Amount of overpayments that occurred because the data/information needed to validate payment accuracy prior to making a payment does not exist $0.0 M
The amount of overpayments that occurred because of an inability to access the data/information needed to validate payment accuracy prior to making a payment $0.0 M
The amount of overpayments that occurred because of a failure to access data/information needed to validate payment accuracy prior to making a payment $260.73 M

Overpayment root cause Overpayment amount
Amount of overpayments outside the agency's control $0 M

Overpayment type Eligibility element/information needed Eligibility amount
Overpayments Within Agency Control Contractor or Provider Status $260.73 M

Overpayment type Mitigation strategies taken Mitigation strategies planned
Overpayments within the agency’s control Audit, Automation, Predictive Analytics, Training Audit, Automation, Predictive Analytics, Training

Underpayments

Underpayment root cause Underpayment amount
Amount of underpayments $0 M

Technically improper payments

The technically improper payments identified under the Exchange Improper Payment Measurement (EIPM) program are the improper payments that are recognized when a legally applicable requirement related to payment conditions is not satisfied by the Exchange, however, there was no impact on the total advance premium tax credit. Per 45 CFR §155.330 (d), the Federally-facilitated Exchange must periodically examine available data sources to identify changes in death, Medicare, Medicaid, and CHIP. In this scenario, the Federally-facilitated Exchange conducted periodic data match checks against the Social Security Administration for death data during the benefit year. A large volume of periodic data match checks occurring simultaneously caused the technical limitation which prevented the generation of the Death Periodic Data Matching verification request for an enrollee As a result of an enrollee was omitted from the batch in error.
The amount of improper payments that were paid to the right recipient for the correct amount but were considered technically improper because of failure to follow statute or regulation $11.03 M

Mitigation strategies taken Mitigation strategies planned
Audit, Training Audit, Training

Additional information

$11.03 M

Unknown Payment Details

Evaluation of corrective actions

The planned and completed actions provide a number of corrective action plans designed to target the APTC error rate. Audits, automation, education, and risk models are all key corrective action plans to reduce the error rate and address the causes of improper payments.

Future payment integrity outlook

Centers for Medicare & Medicaid Services (CMS) - Advance Premium Tax Credit (APTC) has NOT established a baseline.

Out-Year improper payment and unknown payment projections and target
Current year +1 estimated future outlays $55,742.05 M
Current year +1 estimated future improper payments $325.78 M
Current year +1 estimated future unknown payments $0 M
Current year +1 estimated future improper payment and unknown payment rate 0.58 %

The program's current year improper payment and unknown payment rate of 0.58 % may or may not be the tolerable rate. The agency has not yet determined the tolerable rate for this program.

The agency has not yet established a baseline or tolerable rate, as the measurement does not yet include state-based exchanges.

A tolerable rate has not been established for this program. The tolerable rate will be identified when the State-based Exchange improper payment methodology is developed and the tolerable rate methodology is developed. Once the tolerable rate is developed, the agency can determine if we have what is needed with respect to internal controls, human capital and information system and other infrastructure to reduce Improper Payments and Unknown Payments to the tolerable rate.

A tolerable rate has not been established for this program. Once the tolerable rate is developed, the agency can determine if we have what is needed with respect to internal controls, human capital and information system and other infrastructure to reduce Improper Payments and Unknown Payments to the tolerable rate and we can describe the resources requested in the most recent budget submission to establish and maintain internal controls.
CMS sought funding for the Data Services Hub, which provides a query-based verification service with Federal entities and private data sources for information supplied by individuals during the application process. Verified data includes citizenship/immigration status, income, household size, and eligibility for Medicare, veteran’s benefits, or Federal employee benefits. When consumer-provided information does not match electronic data sources, data match inconsistencies are generated and CMS subsequently reviews consumer-submitted supporting documentation to resolve the issue. CMS also sought funding to support the back end functionality of the Federal Exchange including plan management, and the eligibility and enrollment processes.

Additional programmatic information

The Reporting Year (RY) 2023 Federally-facilitated Exchange improper payment rate is statistically similar to the RY 2022 Federally-facilitated Exchange improper payment rate.

CMS is committed to strengthening and maintaining program integrity efforts to reduce improper payments rates. Key corrective actions include identifying and fixing system defects within the Exchanges, training and education for Exchanges peronnel through the use of the Eligibility Support Contractor, and rigorous annual testing of internal controls for the Exchanges. CMS has also developed a risk model to assess agents' and brokers' potential fraud or misconduct. This model calculates a risk score for each agent or broker based on various risk factors. Agents or brokers with the highest risk scores are investigated first.

  • FY 2024 improper payment estimates

    Chart legend and breakdown

    Payment accuracy rate

    Improper payment rate

    Unknown payment rate


    Sampling & estimation methodology details

    Sampling timeframe:

    01/2022 - 12/2022


    Confidence interval:

    95% to <100%


    Margin of error:

    +/-0.6

  • Actions taken & planned to mitigate improper payments

    Mitigation strategy Description of the corrective action Completion date Status
    Automation
    HHS’s corrective actions include identifying and remediating system defects within the Exchanges that may impact APTC payments.  These defects become known through various mechanisms, including internal quality control activities and external reviews of APTC eligibility determinations made by the Exchanges. HHS continually evaluates the policies and procedures that underlie the automated processes associated with APTC to identify and address weaknesses that may surface as they become operationalized.  HHS also proactively improves its automated processes, e.g., the Verify Lawful Presence service with the Department of Homeland Security was upgraded to ensure more accurate and timely lawful presence verifications. HHS implemented process automation to reduce human error introduced during adjudication and processing of supporting documentation.  HHS will continue to encourage and require that additional tasks be automated to further reduce manual errors and improve the accuracy and quality of required adjudication tasks.
    FY2024 Q4
    Completed
    Training
    All personnel undergo a rigorous training when onboarded to the workforce.  They also receive annual refreshers and quick training lessons when program policy or operations are updated.  Ad hoc training is added as additional training needs are identified.  In FY2024, HHS conducted additional training sessions related to Data Matching Issues verifications, casework, and outreach. 
    FY2024 Q4
    Completed
    Audit
    Both the automated and the manual processes of the Exchanges are subject to rigorous annual testing of key internal controls as required by Appendix C of OMB Circular A-123.  External audits by OIG and GAO are another common mechanism that help to identify potential payment integrity risks within the Exchanges, specifically by evaluating APTC eligibility determinations made by the Exchanges within the context of federal statute and regulations.
    FY2024 Q4
    Completed
    Predictive Analytics
    The Marketplace Program Integrity Contractor implemented a risk model that incorporates many risk factors that may indicate potential fraud or misconduct by agents or brokers.  The result is a risk profile and weighted risk score for each agent or broker.  Those that pose the highest risk, based on weighted risk score, are prioritized for investigations.  The risk profile is also leveraged as part of a prioritized investigation and significant discoveries may be used to inform interview questions or as supporting evidence in overall case findings. 
    FY2024 Q4
    Completed
    Automation
    HHS’s corrective actions include identifying and remediating system defects within the Exchanges that may impact APTC payments.  These defects become known through various mechanisms, including internal quality control activities and external reviews of APTC eligibility determinations made by the Exchanges. HHS continually evaluates the policies and procedures that underlie the automated processes associated with APTC to identify and address weaknesses that may surface as they become operationalized.  HHS also proactively improves its automated processes, e.g., the Verify Lawful Presence service with the Department of Homeland Security was upgraded to ensure more accurate and timely lawful presence verifications. HHS implemented process automation to reduce human error introduced during adjudication and processing of supporting documentation.  HHS will continue to encourage and require that additional tasks be automated to further reduce manual errors and improve the accuracy and quality of required adjudication tasks. HHS plans to continue these actions in FY 2025 but will not finalize this decision until the APTC Error Rate data analysis is complete.
    FY2025
    Planned
    Training
    All personnel undergo a rigorous training when onboarded to the workforce.  They also receive annual refreshers and quick training lessons when program policy or operations are updated.  Ad hoc training is added as additional training needs are identified.  In FY2025, HHS will conduct additional training sessions related to Data Matching Issues verifications, casework, and outreach. 
    FY2025
    Planned
    Audit
    Both the automated and the manual processes of the Exchanges are subject to rigorous annual testing of key internal controls as required by Appendix C of OMB Circular A-123.  External audits by OIG and GAO are another common mechanism that help to identify potential payment integrity risks within the Exchanges, specifically by evaluating APTC eligibility determinations made by the Exchanges within the context of federal statute and regulations. HHS plans to continue these actions in FY 2025, but will not finalize this decision until the APTC Error Rate data analysis is complete.
    FY2025
    Planned
    Predictive Analytics
    The Marketplace Program Integrity Contractor implemented a risk model that incorporates many risk factors that may indicate potential fraud or misconduct by agents or brokers.  The result is a risk profile and weighted risk score for each agent or broker.  Those that pose the highest risk, based on weighted risk score, are prioritized for investigations.  The risk profile is also leveraged as part of a prioritized investigation and significant discoveries may be used to inform interview questions or as supporting evidence in overall case findings. HHS plans to continue these actions in FY 2025, but will not finalize this decision until the APTC Error Rate data analysis is complete.
    FY2025
    Planned

Overpayments

The overpayments identified under the EIPM program are considered to be within the agency's control because they resulted from the improper application of established policies and procedures. The majority of the overpayments identified resulted from the agency not following it's own guidance designed to help them complete their tasks. These actions include improper calculation of annual income amounts by not conducting those calculations in accordance with established guidelines and accepting documentation that does not meet requirements to resolve data matching issues. There are also system issues that lead to overpayments that can be addressed by the agency, such as failing to conduct periodic verifications of consumer eligibility due to technical problems interacting with trusted data sources.
Overpayment root cause Overpayment amount
Amount of overpayments within the agency's control $154.38 M
Amount of overpayments that occurred because the data/information needed to validate payment accuracy prior to making a payment does not exist $0.0 M
The amount of overpayments that occurred because of an inability to access the data/information needed to validate payment accuracy prior to making a payment $0.0 M
The amount of overpayments that occurred because of a failure to access data/information needed to validate payment accuracy prior to making a payment $154.38 M

Overpayment root cause Overpayment amount
Amount of overpayments outside the agency's control $0.0 M

Overpayment type Eligibility element/information needed Eligibility amount
Overpayments Within Agency Control Contractor or Provider Status $154.38 M

Overpayment type Mitigation strategies taken Mitigation strategies planned
Overpayments within the agency’s control Audit, Automation, Predictive Analytics, Training Audit, Automation, Predictive Analytics, Training

Underpayments

Underpayment root cause Underpayment amount
Amount of underpayments $0.0 M

Technically improper payments

The technically improper payments identified under the EIPM program are the improper payments that are recognized when a legally applicable requirement related to payment conditions is not satisfied by the Exchange, however, there was no impact on the total advance premium tax credit. The cause of the Technically Improper payments was due to the Federally Facilitated Exchange failing to conduct periodic verifications of consumer eligibility due to technical problems interacting with trusted data sources.
The amount of improper payments that were paid to the right recipient for the correct amount but were considered technically improper because of failure to follow statute or regulation $408.56 M

Mitigation strategies taken Mitigation strategies planned
Audit, Automation, Predictive Analytics, Training Audit, Automation, Predictive Analytics, Training

Additional information

$408.56 M

Unknown Payment Details

Evaluation of corrective actions

The planned and completed actions provide a number of corrective action plans designed to target the APTC error rate. Audits, automation, education, and risk models are all key corrective action plans to reduce the error rate and address the causes of improper payments.

HHS’s corrective actions largely focus on identifying and remediating system defects within the Exchanges that may impact APTC payments. In FY 2024, HHS continued to remediate system defects, conduct trainings, conduct audits, and used risk models to address the root causes of overpayments. These actions led to an error rate of 1.01%. HHS plans to continue these actions in FY 2025 in order to further reduce the error rate.

HHS developed effective corrective actions and mitigation strategies that are focused on identified root causes for improper payments and plans to continue these actions in FY 2024.  The payments that fall into the overpayment category are largely related to manual administrative errors and process errors. In particular the majority of overpayments occurred because of system defects within the Exchanges that may impact APTC payments. Corrective actions focused on identifying and remediating system defects are the best mitigation strategy since they are closely aligned with the largest drivers of the error rate. In addition to remediating system defects, HHS also plans to use staff training, audits, and risk models to address the root causes of improper payments in FY 2025.

The planned and completed actions provide a number of corrective action plans designed to target the APTC error rate. Audits, automation, education, and risk models are all key corrective action plans to reduce the error rate and address the causes of improper payments.

Future payment integrity outlook

Centers for Medicare & Medicaid Services (CMS) - Advance Premium Tax Credit (APTC) has NOT established a baseline.

Out-Year improper payment and unknown payment projections and target
Current year +1 estimated future outlays $73,812.75 M
Current year +1 estimated future improper payments $0 M
Current year +1 estimated future unknown payments $0 M
Current year +1 estimated future improper payment and unknown payment rate 0 %

The program's current year improper payment and unknown payment rate of 1.01 % may or may not be the tolerable rate. The agency has not yet determined the tolerable rate for this program.

The agency has not yet established a baseline or tolerable rate, as the measurement does not yet include state-based exchanges.

A tolerable rate has not been established for this program. The tolerable rate will be identified when the State-based Exchange improper payment methodology is developed and the tolerable rate methodology is developed. Once the tolerable rate is developed, the agency can determine if we have what is needed with respect to internal controls, human capital and information system and other infrastructure to reduce Improper Payments and Unknown Payments to the tolerable rate.

HHS did not include program integrity proposals related to APTC in its FY 2026 Budget request.

Additional programmatic information

The Reporting Year (RY) 2024 Federally-facilitated Exchange improper payment rate is statistically similar to the RY 2023 Federally-facilitated Exchange improper payment rate.

Accountability for detecting, preventing, and recovering improper payments

HHS reports the agency’s improper payment targets annually in the AFR. In addition, HHS sets annual Government Performance and Results Act (GPRA) goals tied to reducing the improper payments. HHS executive officials are held accountable for assessing improper payment rates and taking meaningful steps to address the root causes of error. These efforts are reflected in each executive’s performance plan, as appropriate. HHS also reports quarterly on the specific actions taken to address the improper payment rates through the quarterly scorecard process for high-priority programs, providing a level of public oversight over these efforts. 

  • FY 2025 improper payment estimates

    Chart legend and breakdown

    Payment accuracy rate

    Improper payment rate

    Unknown payment rate


    Sampling & estimation methodology details

    Sampling timeframe:

    01/2023 - 12/2023


    Confidence interval:

    95% to <100%


    Margin of error:

    +/-0.54

Causes

The primary root cause of improper payments were overpayments due to manual errors where the Federally-facilitated Exchange accepted consumer submitted documentation with unacceptable name and date of birth variances to resolve an eligibility verification issue and improperly inputting information in the income
verification tool. The second root cause was technically improper payments which are situations where payments are made to eligible recipients for correct
amounts but failed to satisfy all legally applicable requirements relevant to payment. In these cases, the system failed to conduct a periodic data match required to check Medicare eligibility or enrollment but the Exchange later confirmed that the applicant was not eligible or enrolled in Medicare and therefore eligible for APTC.

Overpayment root cause Overpayment amount
Amount of overpayments within the agency's control $375.02 M
Amount of overpayments outside the agency's control $0.0 M
Amount of overpayments that occurred because the data/information needed to validate payment accuracy prior to making a payment does not exist $0.0 M
Amount of overpayments that occurred because of an inability to access the data/information needed to validate payment accuracy prior to making a payment $0.0 M
Amount of overpayments that occurred because of a failure to access data/information needed to validate payment accuracy prior to making a payment $375.02 M

Underpayment root cause Underpayment amount
Amount of underpayments $0.0 M

The amount of improper payments that were paid to the right recipient for the correct amount but were considered technically improper because of failure to follow statute or regulation $282.44 M

The amount that could either be proper or improper but the agency is unable to determine whether it was proper or improper as a result of insufficient or lack of documentation $0.0 M

Prevention

In FY 2026, HHS will continue to implement corrective actions including health plan training, expanded and accelerated contract-specific Risk Adjustment Data Validation (RADV) audits, and investigations to identify potential fraud and recover overpayments.
Annually, the agency identifies the root causes of improper payments and underpayments and develops specific corrective actions to address them. The planned and completed actions provide a number of corrective action plans designed to target the drivers of the APTC error rate. Audits, automation, education, and risk models are all key corrective action plans to reduce the error rate and address the causes of improper payments.

HHS addresses improper payments in APTC through several corrective actions. To ensure that the corrective actions are effectively implemented and prioritized, HHS has continued to prioritize a number of corrective action plans designed to target the APTC error rate. Audits, automation, education, and risk models are all key corrective action plans that have been prioritized as a way to reduce APTC improper payments.

Payment type Mitigation strategies taken Mitigation strategies planned
Overpayments Audit, Automation, Predictive Analytics, Training Audit, Automation, Predictive Analytics, Training
Technically improper payments Audit, Training Audit, Training

Eligibility element/information needed Description of the eligbility element/information
Contractor or Provider Status Status or standing of contractor or provider, including recipient eligibility to provide medical services

Additional information

CMS is not setting a Current Year +1 Improper Payment and Unknown Payment Reduction target, as the State Based Exchanges are not yet included in the APTC measurement.

Reduction target

0 %

A tolerable rate has not been established for this program. The tolerable rate will be identified when the State-based Exchange improper payment methodology is developed and the tolerable rate methodology is developed. Once the tolerable rate is developed, the agency can determine if we have what is needed with respect to internal controls, human capital and information system and other infrastructure to reduce Improper Payments and Unknown Payments to the tolerable rate.

HHS did not include program integrity proposals related to APTC in its most recent Budget request.

HHS reports the agency’s improper payment targets annually in the AFR. In addition, HHS sets annual Government Performance and Results Act (GPRA) goals tied to reducing the improper payments. HHS executive officials are held accountable for assessing improper payment rates and taking meaningful steps to address the root causes of error. These efforts are reflected in each executive’s performance plan, as appropriate. HHS also reports quarterly on the specific actions taken to address the improper payment rates through the quarterly scorecard process for high-priority programs, providing a level of public oversight over these efforts.

$282.44 M