CMS releases ‘improper payment’ data, showing a small rise for Medicare Advantage
The Centers for Medicare & Medicaid Services (CMS) has released a report on “improper payments” coming out of federal healthcare programs in 2025, with an emphasis on Medicare. According to the agency’s statistics, incidents of “overpayments, underpayments, or payments where insufficient information was provided to determine whether a payment was proper” associated with the flagship program stood at 6.55% for the year, equating to $28.83 billion.
CMS considers that a success. In 2024, the rate was a slightly higher 7.66%. In any case, 10% marks the “threshold for compliance established by improper payment statutory requirements,” and Medicare has not exceeded the mark for nine consecutive years, the agency confirmed.
It added that improper payments are not indicative of fraud or abuse in the system, but instead are typically a result of paperwork-related disputes and errors.
“In some programs, improper payments involve a situation where a state or contractor misses an administrative step that, had it been properly completed, would have resulted in a proper payment,” CMS wrote.
Proper payments are defined as those that are supported by “sufficient documentation” to show reimbursement for a patient encounter was accurate, including details on eligibility and care delivery alike.
Small rise for Medicare Advantage
Improper payment rates for Medicare Part C rose slightly between 2024 to 2025, from 5.61% to 6.09%. CMS said this $3.6 billion increase is likely also a result of clerical mishaps where a “Medicare Advantage organization’s supporting documentation failed to substantiate the beneficiary diagnosis data submitted for payment.”
The agency did not say these errors were the result of deliberate upcoding—something that’s been in the news recently, with Kaiser Permanente agreeing to a record-setting $556M settlement related to allegations its providers submitted invalid diagnosis codes to earn more risk-adjusted payments from CMS.
The health system denies wrongdoing.
Medicaid and CHIP remain under 10%
Rates of improper payment for Medicaid and the Children's Health Insurance Program (CHIP) also rose slightly, but once again remained under the 10% threshold associated with systemic inefficiency.
Based on estimates made by CMS—which looked at data from 2023, 2024 and 2025 to come to its conclusion on the state-run programs—Medicaid improper payments stand at 6.12% for 2025, up from 5.09% in 2024. That equates to a rough difference of $6.2 billion.
CHIP’s improper payment rate rose from an estimated 6.11% to 7.05% in the same timeframe, which is equal to about $300 million.
"The increase in the national Medicaid and CHIP improper payment estimates reflects the effects of unwinding the flexibilities given to states during the COVID-19 public health emergency, such as conducting eligibility redeterminations and provider revalidation requirements, which resumed in April 2023," CMS wrote.
The agency’s full fact sheet is here.
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