Centers for Medicare & Medicaid Services (CMS) - Children's Health Insurance Program (CHIP)

High-priority program

Home > Agencies & Programs > Centers for Medicare & Medicaid Services (CMS) - Children's Health Insurance Program (CHIP)

Program level Payment Integrity results

Sponsoring agency: Department of Health and Human Services

The Children's Health Insurance Program (CHIP) provides low-cost health coverage to children in families that earn too much money to qualify for Medicaid but not enough to buy private insurance. In some states, CHIP covers pregnant women. Each state offers CHIP coverage and works closely with its state Medicaid program. Overpayments occur due largely to eligibility and data processing errors, missing documentation to support eligibility determinations, failure to meet provider enrollment/National Provider Identifier requirements, and medical necessity not documented. Similar to Medicaid, known barriers include lack of sufficient training/utilization of all available resources and ongoing updates to applicable systems.

View on Federal Program Inventory

PROGRAM METRICS

$16,879 M

in FY 2021 outlays, with a

68.2%

payment accuracy rate

PROGRAM METRICS

$16,093 M

in FY 2022 outlays, with a

73.3%

payment accuracy rate

PROGRAM METRICS

$16,670 M

in FY 2023 outlays, with a

87.2%

payment accuracy rate

PROGRAM METRICS

$17,588 M

in FY 2024 outlays, with a

93.9%

payment accuracy rate

PROGRAM METRICS

$19,449 M

in FY 2025 outlays, with a

92.9%

payment accuracy rate

  • Improper payment estimates over time
    View as:

    Chart toggle amounts:
    Proper payments
    Overpayment
    Underpayment
    Technically improper
    Unknown

Payment Integrity results

  • FY 2021 improper payment estimates

    Chart legend and breakdown

    Payment accuracy rate

    Improper payment rate

    Unknown payment rate


    Sampling & estimation methodology details

    Sampling timeframe:

    07/2019 - 06/2020


    Confidence interval:

    >95%


    Margin of error:

    +/-306.68

Overpayments

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

Overpayment root cause Overpayment amount
Amount of overpayments outside the agency's control $5,371.99 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 $5,371.99 M

Underpayments

Underpayment root cause Underpayment amount
Amount of underpayments $1.68 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 $1.68 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

$1.68 M

Unknown Payment Details

Evaluation of corrective actions

Annually, the agency identifies the root causes of IPs and UPs and develops specific corrective actions to address them. This work is reported on through the AFR process.

HHS works closely with all states through enhanced technical assistance (including liaisons that are assigned to each state to assist states with identifying and overcoming barriers to corrective action implementation) and guidance to develop state-specific corrective action plans to reduce improper payments. All states are responsible for implementing, monitoring, and evaluating the corrective action plan’s effectiveness, with assistance and oversight from HHS. When developing corrective action plans, states focus on the major causes of improper payments.

Future payment integrity outlook

Centers for Medicare & Medicaid Services (CMS) - Children's Health Insurance Program (CHIP) has established a baseline.

Out-Year improper payment and unknown payment projections and target
Current year +1 estimated future outlays $17,220 M
Current year +1 estimated future improper payments $4,800.94 M
Current year +1 estimated future unknown payments $0 M
Current year +1 estimated future improper payment and unknown payment rate 27.88 %

The program's current year improper payment and unknown payment rate of 31.84 % has not been achieved with a balance of payment integrity risk and controls and does not represent the lowest rate that can be achieved without disproportionally increasing another risk, therefore it is not the tolerable rate.

A tolerable rate has not been established for this program.

A tolerable rate has not been established for this program.

Additional programmatic information

  • FY 2022 improper payment estimates

    Chart legend and breakdown

    Payment accuracy rate

    Improper payment rate

    Unknown payment rate


    Sampling & estimation methodology details

    Sampling timeframe:

    07/2020 - 06/2021


    Confidence interval:

    95% to <100%


    Margin of error:

    +/-1.83

Overpayments

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

Overpayment root cause Overpayment amount
Amount of overpayments outside the agency's control $4,303.02 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 $4,303.02 M

Underpayments

Underpayment root cause Underpayment amount
Amount of underpayments $1.52 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 $1.52 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

$1.52 M

Unknown Payment Details

Evaluation of corrective actions

"Annually, the agency identifies the root causes of IPs and UPs and develops specific corrective actions to address them. This work is reported on through the AFR process.

HHS works closely with all states through enhanced technical assistance (including liaisons that are assigned to each state to assist states with identifying and overcoming barriers to corrective action implementation) and guidance to develop state-specific corrective action plans to reduce improper payments. All states are responsible for implementing, monitoring, and evaluating the corrective action plan’s effectiveness, with assistance and oversight from HHS. When developing corrective action plans, states focus on the major causes of improper payments."

Future payment integrity outlook

Centers for Medicare & Medicaid Services (CMS) - Children's Health Insurance Program (CHIP) has established a baseline.

CMS expects improvement as the next cycle of states will be undergoing their second measurement under the new eligibility requirements.

Out-Year improper payment and unknown payment projections and target
Current year +1 estimated future outlays $16,613 M
Current year +1 estimated future improper payments $3,495.73 M
Current year +1 estimated future unknown payments $0 M
Current year +1 estimated future improper payment and unknown payment rate 21.04 %
Current year +1 estimated future improper payment and unknown payment reduction target 21.04 %

The program's current year improper payment and unknown payment rate of 26.75 % may or may not be the tolerable rate. The agency has not yet determined the tolerable rate for this program.

Methodology to determine the tolerable rate for this program has not been determined

A tolerable rate has not been established for this program.

A tolerable rate has not been established for this program.

Additional programmatic information

  • FY 2023 improper payment estimates

    Chart legend and breakdown

    Payment accuracy rate

    Improper payment rate

    Unknown payment rate


    Sampling & estimation methodology details

    Sampling timeframe:

    07/2021 - 06/2022


    Confidence interval:

    95% to <100%


    Margin of error:

    +/-1.7

  • Actions taken & planned to mitigate improper payments

    Mitigation strategy Description of the corrective action Completion date Status
    Training
    HHS offers training, technical assistance, and support to state Medicaid program integrity officials through the Medicaid Integrity Institute. In FY 2023, HHS continued a robust training program, which included virtual training opportunities. FY 2023 offerings included provider auditing, certified coding, fraud prevention, and Do Not Pay.
    FY2023 Q4
    Completed
    Change Process
    In FY 2023, HHS continued working with states to implement a robust state-specific Corrective Action Plan process that provides enhanced technical assistance and guidance to states. HHS collaborates with states to establish an effective state-specific Corrective Action Plan (CAP) process, offering enhanced technical assistance and guidance. This involves coordinating with states to create CAPs that address identified errors and deficiencies. HHS monitors each state's progress in implementing these corrective actions and provides training to ensure federal policy compliance. For instance, in July 2023, HHS conducted a quarterly training session on school-based services for fee-for-service individualized educational plan (IEP) billing programs, and the Payment Error Rate Measurement (PERM) difference resolution (DR) and appeals process
    FY2023 Q4
    Completed
    Cross Enterprise Sharing
    HHS shares Medicare data to assist states and territories with meeting Medicaid screening and enrollment requirements. To help alleviate state concerns with the cost of completing the Social Security Administration Death Master File (SSA DMF) check as part of provider screening, HHS worked with the SSA to provide states the DMF. HHS also developed the Transformed Medicaid Statistical Information System (T-MSIS) to facilitate state submission of timely claims data to HHS, expand the MSIS dataset, and allow HHS to review the completeness and quality of state MSIS submissions in real-time.
    The corrective action was not fully completed this reporting period
    Not Completed
    Audit
    Under the Medicaid Eligibility Quality Control (MEQC) Program, states design and conduct pilots to evaluate the processes that determine an individual’s eligibility for Medicaid and CHIP benefits. The MEQC program also reviews eligibility determinations that are not reviewed under Payment Error Rate Measurement (PERM), such as denials and terminations. States have flexibility in designing pilots to focus on vulnerable or error-prone areas identified. In FY 2023, HHS continued conducting audits of beneficiary eligibility determinations in high-risk states based on a risk assessment that reviewed states with higher eligibility improper payment rates, eligibility errors based on GAO or OIG reports, issues identified by states through the MEQC program, and issues identified through HHS’s various corrective action plan oversight processes. Unified Program Integrity Coordinators (UPICs) also perform numerous functions to detect and prevent fraud, and identify broader vulnerabilities to the integrity of Medicaid.
    The corrective action was not fully completed this reporting period
    Not Completed
    Training
    HHS offers training, technical assistance, and support to state Medicaid program integrity officials through the Medicaid Integrity Insitute (MII).
    FY2024
    Planned
    Change Process
    HHS will continue working with states to implement a robust state-specific Corrective Action Plan process that provides enhanced technical assistance and guidance to states.
    FY2024
    Planned
    Cross Enterprise Sharing
    HHS will share Medicare data to assist states and territories with meeting Medicaid screening and enrollment requirements. To help alleviate state concerns with the cost of completing the Social Security Administration Death Master File (SSA DMF) check as part of provider screening, HHS will work with the SSA to provide states the DMF.
    FY2024
    Planned
    Audit
    Under the Medicaid Eligibility Quality Control (MEQC) Program, states design and conduct pilots to evaluate the processes that determine an individual’s eligibility for Medicaid and CHIP benefits. The MEQC program also reviews eligibility determinations that are not reviewed under Payment Error Rate Measurement (PERM), such as denials and terminations. States have flexibility in designing pilots to focus on vulnerable or error-prone areas identified. HHS will also continue conducting audits of beneficiary eligibility determinations in high-risk states based on a risk assessment that reviewed states with higher eligibility improper payment rates, eligibility errors based on GAO or OIG reports, issues identified by states through the MEQC program, and issues identified through HHS’s various corrective action plan oversight processes. Unified Program Integrity Coordinators (UPICs) will also perform numerous functions to detect and prevent fraud, and identify broader vulnerabilities to the integrity of Medicaid.
    FY2024
    Planned

Overpayments

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

Federal funds are dispersed to states for CHIP administration. States are then responsible for determining beneficiary eligibility and ensuring that claims are adjudicated properly. States mainly have issues with enrolled providers not appropriately screened by the state; providers not enrolled; and/or providers without the required NPI on the claim; enrolling a beneficiary when ineligible for CHIP; determining a beneficiary to be eligible for the incorrect eligibility category, resulting in an ineligible service or incorrect federal reimbursement amount being provided; not conducting beneficiary redeterminations timely or at all; or not performing, completing, or providing sufficient documentation to support a required element of the eligibility determination process.
Overpayment root cause Overpayment amount
Amount of overpayments outside the agency's control $2,121.52 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 $2,121.52 M

Overpayment type Eligibility element/information needed Eligibility amount
Overpayments Outside Agency Control Contractor or Provider Status $2,100.3 M
Overpayments Outside Agency Control Medical Status $21.22 M

Underpayments

Underpayment root cause Underpayment amount
Amount of underpayments $0.97 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 $0.97 M

Eligibility element/information needed Eligibility amount
Contractor or Provider Status $0.64 M
Medical Status $0.33 M

Mitigation strategies taken Mitigation strategies planned
Audit, Change Process, Cross Enterprise Sharing, Training Audit, Change Process, Cross Enterprise Sharing, Training

Technically improper payments

States did not maintain documentation to support risk based screening requirements in accordance with 42 CFR 435.436 and/or information regarding eligibility determinations in accordance with 42 CFR 435.914(a).
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 $13.09 M

Mitigation strategies taken Mitigation strategies planned
Audit, Change Process, Cross Enterprise Sharing, Training Audit, Change Process, Cross Enterprise Sharing, Training

Additional information

$14.06 M

Unknown Payment Details

Evaluation of corrective actions

Annually, the agency identifies the root causes of improper payments and underpayments and develops specific corrective action plans (CAPs) to address them. This work is reported on through the Agency Financial Report (AFR) process.

HHS works closely with all states through enhanced technical assistance (including liaisons that are assigned to each state to assist states with identifying and overcoming barriers to corrective action implementation) and guidance to develop state-specific corrective action plans to reduce improper payments. All states are responsible for implementing, monitoring, and evaluating the corrective action plan’s effectiveness, with assistance and oversight from HHS. When developing corrective action plans, states focus on the major causes of improper payments.

Future payment integrity outlook

Centers for Medicare & Medicaid Services (CMS) - Children's Health Insurance Program (CHIP) has established a baseline.

CMS expects improvement as the next cycle of states will be undergoing their second measurement under the new eligibility requirements.

Out-Year improper payment and unknown payment projections and target
Current year +1 estimated future outlays $17,702 M
Current year +1 estimated future improper payments $1,819.77 M
Current year +1 estimated future unknown payments $0 M
Current year +1 estimated future improper payment and unknown payment rate 10.28 %
Current year +1 estimated future improper payment and unknown payment reduction target 10.28 %

The program's current year improper payment and unknown payment rate of 12.81 % may or may not be the tolerable rate. The agency has not yet determined the tolerable rate for this program.

Methodology to determine the tolerable rate for this program has not been determined.

A tolerable rate has not been established for this program. The tolerable rate will be identified when the 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.

Additional programmatic information

The Reporting Year (RY) 2023 CHIP improper payment rate decreased from the RY 2022 CHIP improper payment rate due to a combination of improved state compliance and the impact of COVID-19 review flexibilities afforded to states.

CMS is committed to strengthening and maintaining program integrity efforts to reduce improper payments rates. To reduce the Medicaid & CHIP improper payment rates, CMS developed several corrective actions that focus on system or process changes to reduce errors, including implementing new claims processing edits, converting to a more sophisticated claims processing system, implementing provider enrollment process improvements, implementing beneficiary enrollment and redetermination process improvements, and conducting provider communication and education to reduce errors related to documentation requirements. CMS also recognizes the need to revisit its efforts to prevent waste, fraud, and abuse to account for changing needs, technology, and practices.

  • FY 2024 improper payment estimates

    Chart legend and breakdown

    Payment accuracy rate

    Improper payment rate

    Unknown payment rate


    Sampling & estimation methodology details

    Sampling timeframe:

    07/2022 - 06/2023


    Confidence interval:

    95% to <100%


    Margin of error:

    +/-0.8

  • Actions taken & planned to mitigate improper payments

    Mitigation strategy Description of the corrective action Completion date Status
    Training
    HHS offers training, technical assistance, and support to state Medicaid program integrity officials through the Medicaid Integrity Institute.  In FY 2024, HHS continued a robust training program, which included virtual and in-person training opportunities.  FY 2024 offerings included provider auditing, certified coding, fraud prevention, and Do Not Pay.
    FY2024 Q4
    Completed
    Change Process
    In FY 2024, HHS continued working with states to implement a robust state-specific Corrective Action Plan process that provides enhanced technical assistance and guidance to states. HHS collaborates with states to establish an effective state-specific Corrective Action Plan (CAP) process, offering enhanced technical assistance and guidance. This involves coordinating with states to create CAPs that address identified errors and deficiencies. HHS monitors each state's progress in implementing these corrective actions and provides training to ensure federal policy compliance. For instance, i in February 2024, HHS conducted a quarterly training session on successful root cause identification during PERM CAP development.  In July 2024 HHS conducted a quarterly training on requirements of corrective action regulations.
    FY2024 Q4
    Completed
    Cross Enterprise Sharing
    HHS shares Medicare data to assist states and territories with meeting Medicaid screening and enrollment requirements. To help alleviate state concerns with the cost of completing the Social Security Administration Death Master File (SSA DMF) check as part of provider screening, HHS worked with the SSA to provide states the DMF.  HHS also developed the Transformed Medicaid Statistical Information System (T-MSIS) to facilitate state submission of timely claims data to HHS, expand the MSIS dataset, and allow HHS to review the completeness and quality of state MSIS submissions in real-time. 
    FY2024 Q4
    Completed
    Audit
    Under the Medicaid Eligibility Quality Control program, states design and conduct pilots to evaluate the processes that determine an individual’s eligibility for Medicaid and CHIP benefits.  The Medicaid Eligibility Quality Control program also reviews eligibility determinations that are not reviewed under Payment Error Rate Measurement, such as denials and terminations.  States have flexibility in designing pilots to focus on vulnerable or error-prone areas identified. In FY 2024 HHS continued conducting audits of beneficiary eligibility determinations in high-risk states based on a risk assessment that reviewed states with higher eligibility improper payment rates, eligibility errors based on GAO or OIG reports, issues identified by states through the Medicaid Eligibility Quality Control program, and issues identified through HHS’s various corrective action plan oversight processes. Unified Program Integrity Coordinators (UPICs) also  perform numerous functions to detect and prevent fraud, and identify broader vulnerabilities to the integrity of Medicaid.
    FY2024 Q4
    Completed
    Training
    HHS offers training, technical assistance, and support to state Medicaid program integrity officials through the Medicaid Integrity Institute. HHS will continue these activities in FY 2025.
    FY2025
    Planned
    Change Process
    HHS will continue working with states to implement a robust state-specific Corrective Action Plan process that provides enhanced technical assistance and guidance to states. 
    FY2025
    Planned
    Cross Enterprise Sharing
    HHS will continue to share Medicare data to assist states and territories with meeting Medicaid screening and enrollment requirements. To help alleviate state concerns with the cost of completing the Social Security Administration Death Master File (SSA DMF) check as part of provider screening, HHS will work with the SSA to provide states the DMF.  
    FY2025
    Planned
    Audit
    Under the Medicaid Eligibility Quality Control program, states design and conduct pilots to evaluate the processes that determine an individual’s eligibility for Medicaid and CHIP benefits.  The Medicaid Eligibility Quality Control program also reviews eligibility determinations that are not reviewed under Payment Error Rate Measurement, such as denials and terminations.  States have flexibility in designing pilots to focus on vulnerable or error-prone areas identified. HHS will also continue conducting audits of beneficiary eligibility determinations in high-risk states based on a risk assessment that reviewed states with higher eligibility improper payment rates, eligibility errors based on GAO or OIG reports, issues identified by states through the Medicaid Eligibility Quality Control program, and issues identified through HHS’s various corrective action plan oversight processes. Unified Program Integrity Coordinators (UPICs) will also  perform numerous functions to detect and prevent fraud, and identify broader vulnerabilities to the integrity of Medicaid.
    FY2025
    Planned

Overpayments

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

Federal funds are dispersed to states for CHIP administration. States are then responsible for determining beneficiary eligibility and ensuring that claims are adjudicated properly. States mainly have issues with enrolled providers not appropriately screened by the state; providers not appropriately rescreened at revalidation; providers not enrolled; providers without the required NPI on the claim; enrolling a beneficiary when ineligible for CHIP; determining a beneficiary to be eligible for the incorrect eligibility category, resulting in an ineligible service or incorrect federal reimbursement amount being provided; not conducting beneficiary redeterminations timely or at all; or not performing, completing, or providing sufficient documentation to support a required element of the eligibility determination process, such as income verification.
Overpayment root cause Overpayment amount
Amount of overpayments outside the agency's control $1,019.73 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 $1,019.73 M

Overpayment type Eligibility element/information needed Eligibility amount
Overpayments Outside Agency Control Contractor or Provider Status $1,009.53 M
Overpayments Outside Agency Control Medical Status $10.2 M

Underpayments

Underpayment root cause Underpayment amount
Amount of underpayments $2.46 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 $2.46 M

Eligibility element/information needed Eligibility amount
Contractor or Provider Status $0.3 M
Medical Status $2.16 M

Mitigation strategies taken Mitigation strategies planned
Training Training

Technically improper payments

States did not maintain documentation to support payment processing and beneficiary determinations. During data processing reviews, CMS was able to independently verify risk based screening requirements around database checks to show that the provider would have been eligible for payment had the state maintained documentation to show the screening requirements had been completed in accordance with regulations. During eligibility reviews, CMS was able to independently verify certain eligibility requirements through review of information gathered around separate determinations (i.e., not a Medicaid/CHIP determination) for the beneficiary that provided reasonable support that the beneficiary was eligible.
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 $51.81 M

Mitigation strategies taken Mitigation strategies planned
Training Training

Additional information

$54.27 M

Unknown Payment Details

Evaluation of corrective actions

Annually, the agency identifies the root causes of improper payments and underpayments and develops specific corrective actions to address them. This work is reported on through the agency financial report process.

HHS works closely with all states through enhanced technical assistance (including liaisons that are assigned to each state to assist states with identifying and overcoming barriers to corrective action implementation) and guidance to develop state-specific corrective action plans to reduce improper payments. All states are responsible for implementing, monitoring, and evaluating the corrective action plan’s effectiveness, with assistance and oversight from HHS. When developing corrective action plans, states focus on the major causes of improper payments.

HHS addresses improper payments in Medicaid and CHIP through several corrective actions. To ensure that the corrective actions are adequate, HHS works closely with all states through enhanced technical assistance (including liaisons that are assigned to each state to assist with identifying and overcoming barriers to corrective action implementation) and guidance to develop state-specific corrective action plans to reduce improper payments. All states are responsible for implementing, monitoring, and evaluating the corrective action plan’s effectiveness, with assistance and oversight from HHS. When developing corrective action plans, states focus on major causes of improper payments. 

HHS addresses improper payments in Medicaid and CHIP through several corrective actions. HHS works closely with all states through enhanced technical assistance (including liaisons that are assigned to each state to assist with identifying and overcoming barriers to corrective action implementation) and guidance to develop state-specific corrective action plans to reduce improper payments. All states are responsible for implementing, monitoring, and evaluating the corrective action plan’s effectiveness, with assistance and oversight from HHS. When developing corrective action plans, states focus on major causes of improper payments.

HHS addresses improper payments in Medicaid and CHIP through several corrective actions. HHS works closely with all states through enhanced technical assistance (including liaisons that are assigned to each state to assist with identifying and overcoming barriers to corrective action implementation) and guidance to develop state-specific corrective action plans to reduce improper payments. All states are responsible for implementing, monitoring, and evaluating the corrective action plan’s effectiveness, with assistance and oversight from HHS. When developing corrective action plans, states focus on major causes of improper payments. 

Future payment integrity outlook

Centers for Medicare & Medicaid Services (CMS) - Children's Health Insurance Program (CHIP) has established a baseline.

CMS anticipates an increase in the target rate due to a higher volume of eligibility redeterminations and provider screenings being performed by states subsequent to the end of the PHE. The target assumes a similar, but potentially slightly increased result by using the midpoint of the 2024 improper payment point estimate and the upper bound of the confidence interval.

Out-Year improper payment and unknown payment projections and target
Current year +1 estimated future outlays $17,244.43 M
Current year +1 estimated future improper payments $1,118.68 M
Current year +1 estimated future unknown payments $0 M
Current year +1 estimated future improper payment and unknown payment rate 6.49 %
Current year +1 estimated future improper payment and unknown payment reduction target 6.49 %

The program's current year improper payment and unknown payment rate of 6.11 % may or may not be the tolerable rate. The agency has not yet determined the tolerable rate for this program.

A tolerable rate has not been established for this program.

A tolerable rate has not been established for this program. The tolerable rate will be identified when the 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.

To establish and maintain payment integrity internal controls in HHS included the following program integrity proposals in its FY 2026 Budget request:

• Bolster Medicare & Medicaid Affiliations Provision by Targeting Problematic Nursing Home Owners and Decreasing Provider Affiliations Reporting Burden
• Strengthen CMS’s Ability to Protect Beneficiary Access to Care and Reduce Medicaid and CHIP Beneficiary Eligibility Errors

Additional programmatic information

The Reporting Year (RY) 2024 CHIP improper payment rate decreased from the RY 2023 CHIP improper payment rate due to a combination of improved state compliance and the impact of COVID-19 review flexibilities afforded to states.

CMS is committed to strengthening and maintaining program integrity efforts to reduce improper payments rates. To reduce the Medicaid & CHIP improper payment rates, CMS developed several corrective actions that focus on system or process changes to reduce errors, including implementing new claims processing edits, converting to a more sophisticated claims processing system, implementing provider enrollment process improvements, implementing beneficiary enrollment and redetermination process improvements, and conducting provider communication and education to reduce errors related to documentation requirements. CMS also recognizes the need to revisit its efforts to prevent waste, fraud, and abuse to account for changing needs, technology, and practices.

Accountability for detecting, preventing, and recovering improper payments

The agency's improper payments and underpayments reduction targets and progress towards meeting those goals are reported annually in the Agency Financial Report (AFR). In addition, the agency sets annual Government Performance and Results Act (GPRA) goals related to the improper payment rates and reports quarterly on specific corrective actions to address improper payment rates through the quarterly scorecard process for high-priority programs.

In FY 2024, HHS continued implementing a robust state-specific Payment Error Rate Measurement (PERM) Corrective Action Plans process that provides enhanced technical assistance and guidance to states. HHS works with states to coordinate state development of corrective action plans to address each error and deficiency identified during the PERM cycle. After each state submits its corrective action plan, HHS monitors the state’s progress in implementing effective corrective actions. HHS continued the development of its enhanced corrective action process. HHS also provided training opportunities to ensure compliance with federal policies through the Medicaid Integrity Institute (MII).

  • FY 2025 improper payment estimates

    Chart legend and breakdown

    Payment accuracy rate

    Improper payment rate

    Unknown payment rate


    Sampling & estimation methodology details

    Sampling timeframe:

    07/2023 - 06/2024


    Confidence interval:

    95% to <100%


    Margin of error:

    +/-0.8

Causes

The primary root causes were missing or insufficient documentation, state non-compliance with federal requirements, and improper determinations of beneficiary eligibility. Missing or insufficient documentation accounts for the most significant portion of improper payments and occurred when states did not provide required eligibility verifications, such as income or resource checks, or when medical records lacked information needed to support medical necessity. State non-compliance included inadequate screening of newly enrolled providers, payments to providers not enrolled, claims paid without the required national provider identifier, and claims paid when creditable third-party insurance was present. Improper eligibility determinations occurred when states incorrectly claimed beneficiaries under Title XXI (CHIP) instead of Title XIX (Medicaid) due to errors in income calculations, household composition, third-party insurance status, or tax filer status. CHIP improper payments do not consider unknown payments as there is no mechanism available to track and obtain information, at the state level, to verify if an unknown payment is truly monetary loss or non-monetary loss as described under OMB's definition of an unknown payment. Insufficient documentation is considered monetary loss for the purposes of PIIA reporting.

Overpayment root cause Overpayment amount
Amount of overpayments within the agency's control $0.0 M
Amount of overpayments outside the agency's control $1,304.78 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 $1,304.78 M

Underpayment root cause Underpayment amount
Amount of underpayments $5.73 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 $5.73 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 $61.21 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

CMS addresses improper payments in Medicaid and CHIP through several corrective actions. CMS works closely with all states through enhanced technical assistance (including liaisons that are assigned to each state to assist with identifying and overcoming barriers to corrective action implementation) and guidance to develop state-specific corrective action plans to reduce improper payments. All states are responsible for implementing, monitoring, and evaluating the corrective action plan’s effectiveness, with assistance and oversight from CMS. When developing corrective action plans, states focus on major causes of improper payments.

In FY 2025, the MII expanded its educational offerings, including Evaluation/Management and Inpatient coding bootcamps, provider enrollment, Medicaid risk assessment, and HHS-OIG fraud scheme and trend analysis. HHS also automated and streamlined state submission of Medicaid Eligibility Quality Control (MEQC) and Payment Error Rate Measurement (PERM) Corrective Action Plan data, reducing burden and improving efficiency. HHS continues to provide technical support in areas such as overpayment remittance.
Annually, the agency identifies the root causes of improper payments and underpayments and develops specific corrective actions to address them. This work is reported on through the agency financial report process.

HHS works closely with all states through enhanced technical assistance (including liaisons that are assigned to each state to assist states with identifying and overcoming barriers to corrective action implementation) and guidance to develop state-specific corrective action plans to reduce improper payments. The Payment Error Rate Measurement (PERM) program enables states to focus their most intensive corrective efforts on the error categories that contribute most significantly to overall improper payment rates. All states are responsible for implementing, monitoring, and evaluating the corrective action plan’s effectiveness, with assistance and oversight from HHS. When developing corrective action plans, states focus on the major causes of improper payments.

HHS addresses improper payments in Medicaid and CHIP through several corrective actions. To ensure that the corrective actions are adequate, HHS works closely with all states through enhanced technical assistance (including liaisons that are assigned to each state to assist with identifying and overcoming barriers to corrective action implementation) and guidance to develop state-specific corrective action plans to reduce improper payments. All states are responsible for implementing, monitoring, and evaluating the corrective action plan’s effectiveness, with assistance and oversight from HHS. When developing corrective action plans, states focus on major causes of improper payments. 

Payment type Mitigation strategies taken Mitigation strategies planned
Overpayments Audit, Change Process, Cross Enterprise Sharing, Training Audit, Change Process, Cross Enterprise Sharing, Training
Underpayments Audit, Change Process, Cross Enterprise Sharing, Training Audit, Change Process, Cross Enterprise Sharing, Training
Technically improper payments Audit, Change Process, Cross Enterprise Sharing, Training Audit, Change Process, Cross Enterprise Sharing, 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
Medical Status Identifies whether a person is sick/healthy

Additional information

Reduction target

9.52 %

A tolerable rate has not been established for this program. The tolerable rate will be identified when the 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.

To establish and maintain payment integrity internal controls in HHS included the following program integrity proposals in its FY 2027 Budget request:
• Expand CMS’s authority to allow UPICs to conduct investigations and audits of providers under CHIP

The agency's improper payments and underpayments reduction targets and progress towards meeting those goals are reported annually in the Agency Financial Report (AFR). In addition, the agency sets annual Government Performance and Results Act (GPRA) goals related to the improper payment rates and reports quarterly on specific corrective actions to address improper payment rates through the quarterly scorecard process for high-priority programs.

In FY 2025, HHS continued implementing a robust state-specific Payment Error Rate Measurement (PERM) Corrective Action Plans process that provides enhanced technical assistance and guidance to states. HHS works with states to coordinate state development of corrective action plans to address each error and deficiency identified during the PERM cycle. After each state submits its corrective action plan, HHS monitors the state’s progress in implementing effective corrective actions. HHS continued the development of its enhanced corrective action process. HHS also provided training opportunities to ensure compliance with federal policies through the Medicaid Integrity Institute (MII).

$66.93 M