Fraud, waste, and abuse (FWA) in healthcare are long-standing problems that continue to drain critical public resources and erode trust in state-administered health programs. From inflated claims to ineligible beneficiaries, FWA has become a growing concern for state agencies overseeing Medicaid and Medicare — programs that serve tens of millions of Americans and operate with billions of taxpayer dollars.
The growing national focus on preventing fraud and improper payments was reinforced in March 2025, when the White House issued an Executive Order on Protecting America’s Bank Account Against Fraud, Waste, and Abuse. The order highlights that the federal government processes trillions of dollars annually and acknowledges a critical lack of controls to ensure those funds are properly disbursed — particularly through programs like Medicaid and Medicare.
The Executive Order directs the Department of the Treasury to strengthen pre-certification verification for all federal disbursements and calls on agencies to provide better data and implement fraud-prevention systems.
For state Medicaid agencies, this federal push aligns directly with the urgent need to modernize eligibility and payment verification systems — the very gap that CITIZ3N’s AVS technology is built to fill.
The Scope of the Problem: Billions at Risk
According to the Centers for Medicare & Medicaid Services (CMS), improper payments across federal healthcare programs continue to pose a major challenge. In FY 2024, CMS reported an estimated $31.1 billion in improper Medicaid payments and $31.7 billion in Medicare fee-for-service improper payments. The vast majority of Medicaid errors—over 79%—were due to insufficient documentation, not fraud, often tied to outdated or incomplete eligibility verification processes.
These are not just accounting issues — they represent real dollars diverted from vulnerable populations and financially strained state budgets.
Real-World Cases of FWA
In recent years, states have faced mounting scrutiny over lax eligibility systems and poor oversight:
- California: A 2022 audit revealed that 1 in 5 Medi-Cal enrollees may not have been eligible, costing the state hundreds of millions annually.
- New York: In October 2024, federal prosecutors charged eight individuals, including owners of Brooklyn-based adult day care centers, for allegedly defrauding the program of $68 million through kickbacks and false payments processed via a fiscal intermediary, Responsible Care Staffing.
These examples underscore a common pattern: outdated eligibility systems and manual verification processes leave the door open to costly misuse.
How Outdated Systems Contribute to FWA
Many states still rely on legacy technologies and fragmented databases to manage Medicaid and CHIP eligibility. These systems often:
- Lack real-time data integration
- Depend heavily on paper-based documentation
- Require manual eligibility redetermination processes
- Struggle to verify residency, income, or life changes accurately
As a result, eligible individuals may be dropped, while ineligible individuals remain enrolled — both outcomes contributing to fraud, waste, and systemic inefficiencies.
CMS estimates that the national Medicaid improper payment rate in 2024 was 5.09%; in other words, nearly 95 percent of Medicaid payments were likely proper. The 5.09% rate translates into an estimated improper payment amount of $31.1 billion in federal funds. Of that amount, $23.4 billion, or 74% of the payments reviewed were classified as improper due to insufficient documentation.
The Need for Modern, Automated Verification
To protect Medicaid integrity and improve program performance, states must turn to automated, real-time verification systems that streamline eligibility processes and flag high-risk cases proactively.
That’s where solutions like CITIZ3N’s Automated Verification Services (AVS) come in.
How CITIZ3N Is Helping Agencies Combat FWA
CITIZ3N’s AVS offering is built to help state agencies close the gap between eligibility policy and real-world execution. Our technology empowers agencies to:
- Verify eligibility data in real time, using trusted third-party and federal data sources
- Detect anomalies and red flags across income, residency, and household data
- Automate redetermination cycles, improving accuracy and reducing administrative burden
- Minimize duplicate coverage and improper enrollments
By leveraging AVS, states can reduce improper payments, strengthen audit readiness, and build public trust through program transparency and efficiency.
Conclusion: A Call to Action
Fraud, waste, and abuse are not just line items — they represent a systemic challenge that weakens the effectiveness of public healthcare programs. As improper payments climb and oversight becomes more complex, modernizing eligibility verification should be a top priority for every state Medicaid agency.
Solutions like CITIZ3N’s AVS help agencies move from reactive compliance to proactive program integrity — protecting taxpayer dollars while improving service delivery for the people who rely on these programs most.
Let’s build a smarter, more secure healthcare system — one where integrity is built in.
