REDUCING IMPROPER MEDICAID PAYMENTS BEFORE THEY OCCUR

 

Stephen Konsin Jr. from Syrtis Solutions, a solution provider at the Marcus Evans Value-Based Care Summit 2026, discusses the growing need for proactive Medicaid payment accuracy and cost avoidance strategies.

Interview with: Stephen Konsin Jr., Vice President of Sales, Syrtis Solutions

“The window for demonstrating proactive prevention of improper payments before the 2030 mandatory Federal Medical Assistance Percentage (FMAP) reductions is narrowing with each fiscal quarter. Organizations that act now will be positioning themselves to meet federal compliance expectations while realizing multi-year operational benefits. Those that delay it will have limited time to demonstrate sustained improvement trends, reducing options for mitigating FMAP consequences,” says Stephen Konsin Jr., Vice President of Sales, Syrtis Solutions.

Syrtis Solutions is a solution provider at the Marcus Evans Value-Based Care Summit 2026.

What is changing with the One Big Beautiful Bill Act? What do healthcare leaders need to plan for?

The One Big Beautiful Bill Act (H.R. 1) converts improper payment performance from a compliance benchmark into a direct funding trigger. Beginning in FY2030, states will face mandatory FMAP reductions when Medicaid improper payment rates exceed three percent. This represents a paradigm shift from discretionary oversight to automatic financial penalties, with only limited waiver authority available to states demonstrating good-faith corrective action. FMAP reductions are triggered by error rates at adjudication, not by net financial impact after recovery efforts.

For healthcare organizations, unknown primary commercial insurance coverage represents a significant preventable category of improper Medicaid payments. When beneficiaries have unreported or recently activated commercial insurance, Medicaid systems lack real-time visibility at claim adjudication. Traditional third-party (TPL) liability infrastructure cannot close this gap. TPL programs mostly rely on member self-disclosure, delayed batch feeds, and periodic data matching that structurally miss coverage changes between verification cycles. What was improper at adjudication remains improper in Payment Error Rate Measurement (PERM) calculations regardless of later corrective action.

Why is the compliance clock ticking? What strategies could they implement to reduce improper payments before they occur?

We address this structural constraint through real-time access to nationwide commercial payer eligibility data. The platform verifies primary coverage by identifying previously unknown commercial insurance, enabling prevention before Medicaid payment occurs. This directly addresses the compliance metric triggering FMAP reductions. For Medicaid agencies and managed care organizations facing mandatory FMAP consequences, the compliance timeline is compressed. Organizations implementing real-time prevention capabilities now can demonstrate multi-year improvement trends before 2030 consequences take effect, thus creating the operational track record that limited waiver authority requires.

The FY2030 FMAP reduction mandate transforms prevention from operational “best practice” to fiscal imperative. States can no longer rely on recovery performance to manage TPL compliance. The PERM methodology measures error rates at adjudication, creating permanent advantages for prevention approaches that stop improper payments before they occur. Recovery programs remain necessary components of comprehensive TPL operations, addressing improper payments that evade prevention systems and managing historical claims. However, recovery alone cannot achieve FMAP compliance when error rates exceed three percent. Only prevention capabilities that reduce gross improper payment rates can protect federal medical assistance funds under the One Big Beautiful Bill Act requirements.

Why can’t traditional approaches solve this?

The fundamental constraint is data availability at the time of claims payment. The traditional pay-and-chase model is a rational response to ensure beneficiary access through prompt payment. However, this model cannot prevent FMAP reductions as it addresses errors after they occur.

Prospective prevention eliminates improper claims payments before occurrence by verifying coverage at payment decision and routing all future claims appropriately. A claim correctly routed to commercial insurance never appears as an improper Medicaid payment in PERM audits. It requires no identification, investigation, recovery or reconciliation. It creates no provider friction, member confusion or administrative burden. Cost avoidance is permanent and the improper payment never exists. This is not incremental improvement to recovery but a structural shift from retrospective correction to prospective prevention.

Does it work with their existing infrastructure?

Syrtis does not replace disclosed coverage already captured in eligibility systems, traditional carrier feeds or batch matching processes. It supplements existing infrastructure by addressing the specific gap those systems structurally cannot close. It identifies commercial coverage never disclosed to the state, coverage that changed since the last data match and coverage resulting from recent life events not yet in batch systems. Typical deployments reach full operational status within three months of project initiation, well within the window needed to begin building a measurable compliance track record before 2030 consequences take effect. The platform is designed to minimize implementation risk while maximizing operational resilience.

Any final thoughts?

In an environment where FMAP protection depends on preventing improper payments rather than recovering them afterward, the difference between prevention and recovery is the difference between maintaining federal matching funds and facing mandatory reductions compounding with every fiscal year.

Federal auditors will increasingly differentiate between programs that have embedded real-time prevention into operations versus those reliant on retrospective correction. The operational track record of implementing real-time verification in 2026, processing millions of claims over subsequent years, and identifying thousands of previously unknown commercial policies with measurable TPL-related improper rate declines presents a fundamentally different compliance profile than maintaining robust recovery while continuing payment without real-time verification.

Contact: Sarin Kouyoumdjian-Gurunlian, Press Manager, Marcus Evans, Summits Division, press@marcusevanscy.com

Click here to enter you details for more information.

About the Value-Based Care Summit 2026

The Value-Based Care Summit aims to foster innovative thinking, share inspiring ideas, and promote community connections. Our continuing mission is to curate an engaging program featuring visionary keynote presentations, real-life case studies and interactive forums delivered by compelling speakers and expert moderators. To achieve this vision we choose our collaborators with great precision – we seek out professionals who have deep expertise and hands-on experience, and can present cutting-edge insights that spark conversation.

About Syrtis Solutions

Syrtis Solutions was founded in 2011 after seeing payers of last resort – Medicaid, Medicare and Marketplace plans – struggle to properly identify third-party liability (TPL) information quickly and accurately. Still today, health plans rely on stale data mined from millions of other health insurance (OHI) coverage records that are incomplete, often expired, and frequently for the wrong member. This poor-quality data leads to member disruption and provider abrasion at the pharmacy counter, OHI overrides, and claims paid in error which fuels ineffective “pay and chase” recovery solutions – returning less than 17% of dollars attempted for recovery.

Today, we are helping solve this problem for health plans – looking for OHI on 42% of the Medicaid managed care lives covered by 83 different health plans. If you are looking for a better OHI discovery solution that reduces your reliance on “pay and chase” efforts – we invite you to meet with us. With as few as 5,000 member records, we can show you the opportunities you are missing and the quality of your current OHI data. Within just a few weeks, you will see your OHI cost avoidance efforts increase due to better quality OHI data, and we bet you will see less OHI override calls to your member services and pharmacy help desk as well!

www.syrtis.com

About Marcus Evans Summits

Marcus Evans Summits are high level business forums for the world’s leading decision-makers to meet, learn and discuss strategies and solutions. Held at exclusive locations around the world, these events provide attendees with a unique opportunity to individually tailor their schedules of keynote presentations, case studies, roundtables and one-on-one business meetings. For more information, please visit www.marcusevans.com

All rights reserved. The above content may be republished or reproduced. Kindly inform us by sending an email to press@marcusevanscy.com

Discover more. 

MEDICAID INDUSTRY UPDATE – MARCH 2026

 

Our monthly Medicaid news summary highlights important developments affecting Medicaid programs nationwide. The roundup focuses on research findings, regulatory changes, and policy discussions related to program integrity, cost avoidance, coordination of benefits, and efforts to address improper payments and fraud. Below is a recap of last month’s Medicaid headlines.

Learn more here. 

CLOSING THE GAPS: WHY FRAUD, WASTE, AND INEFFICIENCY CONTINUE TO DRAIN MEDICAID RESOURCES

Medicaid is one of the largest and most vital healthcare programs in the United States, serving millions of low-income individuals, seniors, and people with disabilities. As the program has expanded, so has the responsibility to ensure that every dollar is used appropriately. Yet despite ongoing oversight efforts, billions of dollars are lost each year to fraud, waste, and administrative inefficiencies—diverting critical funding away from patient care.

Fraud, defined as the intentional misuse of the program for financial gain, remains a visible and serious issue. Cases often involve providers billing for services that were never performed or overstating the level of care delivered. However, fraud represents only a fraction of the problem. The majority of improper payments stem from systemic and operational challenges—issues such as incomplete eligibility data, missing documentation, and gaps in coordination between Medicaid and other payers.

These challenges are structural. Medicaid operates in a constantly changing environment where beneficiary eligibility can shift rapidly due to income changes, employment status, or life events. At the same time, individuals may gain access to other forms of insurance that are not immediately reflected in Medicaid systems. When this information is not visible at the time a claim is processed, Medicaid may pay claims that should have been covered elsewhere or that do not meet program requirements.

The root of this issue lies in the disconnect between Medicaid’s modern-day complexity and its legacy infrastructure. Many of the program’s administrative processes were built decades ago, when enrollment was smaller, and data exchange was slower. Eligibility updates were periodic, data sharing was limited, and systems were not designed for real-time decision-making. While Medicaid has grown into a highly complex, multi-payer environment, much of its operational framework still relies on outdated approaches.

As a result, states often rely on eligibility and third-party liability data that is delayed or incomplete. Coverage information may lag behind real-world changes by weeks or even months, creating blind spots during claim adjudication. These blind spots are where improper payments occur—not necessarily because of intentional misuse, but because the system lacks the timely information needed to make accurate decisions.

The financial implications are significant. Improper payments reduce the pool of available resources, placing additional strain on state budgets and limiting the ability to invest in care delivery. Over time, this can impact the sustainability of key programs and services. At the same time, rising scrutiny from federal oversight agencies increases pressure on states to improve payment accuracy.

Traditional program integrity strategies have focused heavily on identifying and recovering improper payments after they occur. While audits and investigations remain important, they are inherently reactive. By the time an issue is identified, the funds have already been spent, and recovery efforts are often partial and resource-intensive.

A more effective approach focuses on preventing errors before they happen. By improving real-time visibility into eligibility and other coverage, Medicaid programs can ensure that claims are processed correctly from the outset. Modern data integration and real-time verification capabilities allow states to identify other available coverage, validate eligibility, and coordinate benefits more effectively—reducing reliance on post-payment corrections.

This shift from recovery to prevention represents a fundamental evolution in Medicaid program integrity. It not only protects financial resources but also reduces administrative burden and improves overall program efficiency.

Ultimately, addressing fraud, waste, abuse, and inefficiency is about ensuring that Medicaid can continue to meet the needs of the populations it serves. As the program continues to grow in scale and complexity, investing in real-time, data-driven solutions will be essential. Without that transformation, longstanding gaps will persist—allowing preventable losses to continue and limiting the program’s ability to deliver high-quality care where it is needed most.

Read more here. 

MEDICAID INDUSTRY UPDATE – FEBRUARY 2026

 

To keep Medicaid professionals informed, Syrtis Solutions compiles a monthly overview of key Medicaid news. The report focuses on developments in program integrity, coordination of benefits, cost avoidance strategies, and ongoing efforts to reduce improper payments and fraud across the healthcare system. The following section summarizes last month’s news.

View the news. 

REIMAGINING MEDICAID PROGRAM INTEGRITY FOR A NEW ERA

Medicaid is one of the most complex and consequential public programs in the country. Every day, state agencies and managed care organizations determine eligibility, adjudicate millions of claims, coordinate benefits, and ensure access to essential services for vulnerable populations.

As fiscal conditions tighten and oversight intensifies, the margin for payment error continues to shrink. Strengthening Medicaid program integrity is no longer simply a compliance function—it is central to protecting limited resources, preserving benefits, and sustaining public confidence in the program.

When executed effectively, integrity efforts do not restrict care. They stabilize and protect it.

Integrity as a System Strength

Medicaid program integrity is the system’s ability to pay accurately, administer efficiently, and ensure funds are directed to eligible individuals and appropriate providers. It reflects disciplined operations and fosters trust.

Improper payments remain the federal government’s primary measurement tool for payment accuracy. Yet most improper payments are not fraud. They stem from documentation gaps, eligibility timing mismatches, incomplete third-party liability (TPL) information, or administrative process breakdowns. 

In 2025 alone, 77.2% of improper Medicaid payments resulted from insufficient documentation or missing administrative steps.

The Medicaid environment is uniquely susceptible to these issues due to:

• Frequent eligibility redeterminations

• Income volatility among beneficiaries

• Household composition changes

• Layered federal and state requirements

• Coordination with other public and commercial coverage

Without timely, reliable data and flexible systems, even well-managed programs face exposure to preventable errors.

The solution lies in building integrity into the workflow—not layering it on after payment.

Moving from Recovery to Prevention

Historically, many Medicaid integrity efforts have centered on post-payment recovery. While recovery plays an important role, it is inherently reactive and often inefficient. Recovery rates frequently represent only a fraction of the original improper payment, and the administrative burden can be substantial.

A prevention-first model delivers stronger results.

Three core strategies are driving measurable improvements across states:

1. Real-Time Verification and Data Connectivity

Automated data exchange across trusted federal and state systems reduces reliance on manual verification and self-reported information. Secure integrations can validate eligibility factors, confirm identity, and detect conflicting coverage before a claim is finalized.

When verification occurs upstream, agencies minimize downstream disruption—including appeals, recoupments, and retroactive eligibility corrections.

Improved data quality leads to cleaner claims, fewer reversals, and greater predictability.

2. Targeted Technology for Third-Party Liability Prevention

One of the largest sources of preventable Medicaid overpayments is undetected commercial coverage. As the payer of last resort, Medicaid must defer payment when other health insurance (OHI) exists. When that coverage goes unidentified, improper payments occur—even when no fraud is involved.

Modern cost-avoidance platforms address this vulnerability directly.

Syrtis Solutions developed ProTPL, a near-real-time OHI discovery platform designed specifically for Medicaid agencies and managed care organizations. By integrating into claims workflows and executing electronic eligibility transactions, ProTPL identifies active commercial coverage before claims are paid.

Rather than relying on outdated batch files, self-disclosure, or retrospective audits, the platform supports prospective prevention. This approach:

• Increases OHI discovery rates

• Reduces reliance on low-yield “pay-and-chase” recovery

• Strengthens compliance with payer-of-last-resort requirements

• Preserves funds for beneficiary care

By preventing improper payments at the point of adjudication, agencies convert integrity into immediate fiscal protection.

3. Intelligent Automation and Risk Prioritization

Artificial intelligence and advanced analytics are enhancing program integrity teams’ ability to identify risk patterns. These tools can:

• Flag inconsistencies in eligibility data

• Prioritize high-risk claims for review

• Monitor provider billing anomalies

• Detect systemic trends across programs

When deployed responsibly, automation increases speed and precision while allowing experienced staff to focus on complex cases that require judgment and oversight.

Aligning Integrity with Access

Some stakeholders worry that stronger oversight may complicate access for eligible individuals. In reality, early prevention reduces administrative friction.

When errors are caught before payment:

• Beneficiary service experiences are improved

• Providers experience fewer recoupments

• Appeals and disputes decline

• Administrative workloads decrease

Savings generated from improved payment accuracy can be reinvested into faster enrollment processing, enhanced outreach, and improved service delivery.

Integrity and access reinforce one another when systems are designed correctly.

The Fiscal Imperative

As states navigate constrained budgets and heightened federal oversight, incremental improvements in improper payment rates translate into significant financial stabilization. Even a one-percent improvement can represent tens of millions of dollars preserved in many states.

Beyond dollars saved, strong program integrity demonstrates accountability. Legislators, taxpayers, and oversight bodies expect measurable stewardship of public funds. Transparent, data-driven integrity efforts strengthen the credibility of Medicaid programs and protect their long-term viability.

A Strategic Path Forward

Medicaid integrity should not be treated as a compliance checklist—it should be embraced as a core operational capability. Agencies that invest in real-time verification, modern technology, and proactive cost-avoidance tools position themselves to:

• Reduce preventable improper payments

• Lower administrative recovery costs

• Improve budget predictability

• Protect critical services without reducing benefits

In an era of fiscal pressure and heightened accountability, prevention is protection.

By embedding accuracy into every stage of the eligibility and claims lifecycle, Medicaid leaders can safeguard both public resources and beneficiary access—ensuring the program remains strong, stable, and sustainable for the millions who rely on it.

Click and read more. 

JANUARY MEDICAID PROGRAM INTEGRITY SNAPSHOT

 

Syrtis Solutions’ monthly Medicaid mailer provides a focused look at the policy and operational changes influencing payment accuracy and program integrity. Below is a snapshot of notable Medicaid developments from the last month.

Read more here. 

ADDRESSING MEDICAID BUDGET PRESSURE WITHOUT REDUCING BENEFITS

As states prepare their fiscal year (FY) 2027 Medicaid budgets, financial flexibility is becoming increasingly limited. State revenue growth has slowed, healthcare costs continue to climb, and federal policy changes enacted through the 2025 budget reconciliation law have altered how future funding risk is managed. Even as enrollment stabilizes, Medicaid spending remains on an upward trajectory, driven by higher clinical complexity, increased utilization of long-term services and supports, rising pharmacy expenditures, and expanded behavioral health needs.

In this environment, states are revisiting familiar cost-containment strategies. Proposals to reduce provider reimbursement, narrow optional benefits, or tighten utilization controls are once again entering budget conversations. While these measures can reduce spending in the short term, they often introduce downstream challenges—including access limitations, provider participation concerns, and outcomes that conflict with CMS’s emphasis on coverage stability and care quality. As financial pressure grows, Medicaid agencies and managed care organizations (MCOs) are increasingly seeking alternatives that protect budgets without undermining benefits.

Improper Payments Now Carry Direct Budget Risk

One of the most significant shifts affecting Medicaid finances is the heightened consequence of payment errors. Improper payments above the federal 3 percent threshold now result in concrete funding penalties, regardless of whether states later recover the dollars. Federal matching funds may be reduced for any excess over the benchmark, with fewer opportunities for exceptions or mitigation.

This framework fundamentally changes the role of recovery. Post-payment collections no longer shield states from financial exposure or help preserve future funding. A payment made incorrectly remains improper under federal standards—even if it is later recouped—making prevention the only reliable way to manage risk.

Moving Beyond “Pay and Chase”

A large portion of Medicaid improper payments occur when claims should have been paid by another insurer. Traditional recovery-based approaches identify these issues only after funds have been disbursed, offering little benefit in reducing improper payment rates.

Prospective cost avoidance addresses this challenge by stopping errors before they occur. Real-time identification of other health insurance and third-party liability ensures Medicaid consistently acts as the payer of last resort. Each avoided improper payment directly supports compliance with the 3 percent standard and preserves funding for covered services.

Operational Accuracy Drives Financial Stability

Administrative inefficiencies often compound budget challenges. Manual claims review, fragmented eligibility systems, and delayed coverage verification increase error rates while adding operational cost.

By automating eligibility checks, coverage validation, and claims workflows, Medicaid programs and MCOs can improve accuracy while reducing administrative burden. Operational modernization enables compliance with federal standards without shifting costs onto providers or beneficiaries.

Program Integrity as a Budget Strategy

Program integrity has become a central component of fiscal management rather than a retrospective compliance exercise. Continuous monitoring, data-driven oversight, and early risk detection allow states to prevent recurring payment issues before they escalate.

When paired with prospective cost avoidance, these efforts reduce financial leakage, improve audit preparedness, and support long-term budget sustainability—even during periods of economic uncertainty.

Protecting Coverage Through Prevention

As Medicaid budgets face increasing pressure, benefit reductions should remain a last-resort option. The most effective way to prepare for funding constraints is to ensure claims are paid correctly the first time.

Preventing improper payments, maintaining compliance with the federal 3 percent standard, and modernizing operational processes allow states and MCOs to preserve access to care while safeguarding limited resources. In today’s Medicaid environment, cost avoidance is not optional—it is essential to sustaining program integrity and financial stability.

Discover more.