Why Medicaid fraud enforcement alone cannot solve a $37B problem

Federal agencies are placing renewed focus on Medicaid fraud, reflecting growing concern about the scale and persistence of improper payments. The March 2026 announcement of a Task Force to Eliminate Fraud reflects a serious effort to strengthen oversight across federal benefit programs. But the data tells a more nuanced story. More than 77% of Medicaid improper payments are tied to insufficient documentation, not confirmed fraud or abuse.

That distinction matters. It means much of the risk in the system is not coming from bad actors. It comes from how information is collected, verified and maintained. In many cases, the issue is not that eligibility is wrong. It is that it cannot be clearly supported at the time of review.

Where the system actually breaks down

Medicaid has been flagged as a high-risk program for more than two decades. The Government Accountability Office placed it on its High-Risk List in 2003, and it remains there today. Over that time, agencies have expanded oversight, issued recommendations and strengthened enforcement. Yet improper payment rates have remained relatively stable.

The reason is straightforward. The system is designed to validate information after it is submitted rather than ensuring accuracy upfront.

Applicants are asked to provide a large amount of information through self-attestation. Verification of that information often happens later, sometimes much later. That gap between submission and validation creates risk. Incomplete or unsupported information moves forward, and agencies are left to reconcile it after the fact.

This is where delays, rework and audit issues begin to build. Improper payments often occur not because someone was ineligible, but because the documentation supporting that eligibility cannot be fully substantiated when reviewed.

Enforcement is effective, but limited

There is no question that enforcement plays an important role. Medicaid Fraud Control Units recovered nearly $2 billion in fiscal 2025, returning $4.64 for every dollar invested. That is a strong outcome and an important part of maintaining program integrity.

But enforcement is inherently reactive. It happens after payments have been made and after issues have already entered the system.

When compared to the total volume of improper payments, recovery only addresses a portion of the exposure. It does not change the conditions that allow those errors to occur in the first place.

This pattern has been held over time. Improper payment rates have not meaningfully declined, even as enforcement has expanded. New fraud schemes and billing complexities continue to emerge, often faster than detection systems can adapt.

That points to a different conclusion. The issue is not simply enforcement. It is how risk is introduced at the front end of the process.

Shifting the focus to prevention

If the goal is to reduce improper payments at scale, the most effective place to focus is intake — the front door where eligibility data is first captured. It is where accuracy can either be established or compromised. Once incomplete or inconsistent information enters the system, it becomes harder and more expensive to chase and fix. 

Strengthening intake does not require changing eligibility rules. It requires improving how information is collected and verified.

Several operational shifts can support that effort:

• Upstream data verification: Drawing from authoritative data sources at the start of the application process can improve accuracy before information enters the system.
• Integrated validation workflows: Embedding verification throughout the intake process allows agencies to confirm key eligibility factors in real time rather than relying on retrospective review.
• Coordinated data exchange: Improved interoperability between federal and state databases enables earlier identification of discrepancies and reduces reliance on duplicative inputs.

These approaches focus on improving the reliability of the data driving eligibility decisions. By addressing application data quality at the source, agencies can reduce the volume of improper payments that enforcement efforts must later address.

Aligning enforcement with system design

The current increase in federal scrutiny reflects a broader recognition that program integrity depends on more than enforcement alone. Oversight is necessary. Recovery is necessary. But neither can fully address the structural conditions that allow improper payments to occur.

A more durable approach requires aligning enforcement with modernization efforts. This includes investing in solutions that support accurate, timely and verifiable decisions from the outset, ensuring that processes are both consistent and scalable.

Medicaid is a complex program, and that complexity is not going away. As the program continues to evolve, the challenge will be to build administrative processes that can keep pace with its scale while maintaining accuracy and accountability. The goal is not only to detect fraud more effectively, but to reduce the likelihood of improper payments before they occur.

A more sustainable path forward

The creation of a federal task force signals a clear commitment to strengthening program integrity. That effort can be reinforced by addressing the operational realities that shape how eligibility is determined and verified. When more than three-quarters of improper payments are linked to documentation gaps, improving data accuracy becomes a central component of any long-term solution.

Preventing improper payments requires more than enforcement. It requires systems that can support accurate, timely and verifiable decisions at scale. By focusing on how data is collected, validated and shared, federal and state agencies can reduce risk, improve accountability and strengthen the overall performance of Medicaid.

This is not about replacing enforcement. It is about supporting it with better input. The long-term goal is not just to recover improper payments. It is to prevent them. And that starts at the front door.

Peter Justen is an entrepreneur and innovator focused on modernizing public benefit systems. As founder and CEO of AmeriTrust Solutions, he works at the intersection of technology, data and human-centered design to improve access to government programs and streamline administrative processes.

With more than three decades of experience spanning technology, finance, and social impact, Peter has led efforts to make complex systems more efficient and accessible for vulnerable populations. He is also the author of Guardians of Care: The Evolution of Medicaid in the U.S., reflecting his commitment to strengthening and advancing the nation’s public benefit infrastructure.

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