Stay informed on the latest developments affecting Medicaid with the Syrtis Solutions monthly Medicaid news roundup. Each edition highlights relevant research, legislation, and industry updates involving program integrity, cost avoidance, coordination of benefits, improper payments, and fraud, waste, and abuse. Below is a recap of last month’s Medicaid news.
#Medicaid #SyrtisSolutions
Medicaid payment integrity remains a priority as federal oversight identifies continued challenges in reducing improper payments. An August 2026 HHS OIG audit found that HHS did not fully satisfy federal payment integrity requirements for FY2025, while Medicaid's reported improper payment rate increased.
According to the HHS OIG report, Medicaid's improper payment rate rose from 5.09% in FY2024 to 6.12% in FY2025. OIG also concluded that HHS had not demonstrated sufficient improvement in Medicaid payment integrity.
While improper payments have numerous causes, the findings reinforce the importance of strengthening controls throughout the payment process.
For Medicaid, identifying other liable coverage is an important part of making accurate payment decisions.
CMS Medicaid COB/TPL guidance states that Medicaid is generally the payer of last resort and requires states to take reasonable measures to identify third parties legally responsible for beneficiaries' healthcare costs.
The effectiveness of that process depends heavily on data.
Third-party insurance information can become outdated as beneficiaries gain or lose employer-sponsored coverage or move between health plans. Without current information, another payer's responsibility may not be apparent when Medicaid adjudicates a claim.
When coverage is known before payment, Medicaid has an opportunity to cost avoid the claim.
CMS guidance on third-party liability distinguishes this process from pay and chase. Cost avoidance addresses known third-party responsibility before Medicaid payment, while pay and chase seeks reimbursement after Medicaid has already paid.
Recovery remains an important safeguard, but it begins after Medicaid dollars have left the program.
The challenges surrounding improper payments and traditional pay-and-chase recovery support a broader approach in which Medicaid payers use both prospective and retrospective controls.
Real-time insurance discovery provides an opportunity to strengthen the prospective side of TPL.
Syrtis Solutions' real-time prospective cost avoidance technology helps Medicaid payers identify active third-party coverage before claims are paid. Better coverage visibility can improve COB/TPL accuracy, support payer-of-last-resort requirements, and reduce avoidable Medicaid expenditures.
Medicaid payment integrity requires controls that operate throughout the claims lifecycle. Strengthening COB/TPL information before payment, while maintaining effective recovery capabilities after payment, gives Medicaid programs a more comprehensive approach to identifying liability and protecting program funds.
Payment Prevention is emerging as the cornerstone of modern Medicaid program integrity. While fraud enforcement remains an essential responsibility, federal policymakers are increasingly emphasizing payment accuracy before claims are paid. That direction is reflected in both the March 2026 announcement of the federal Task Force to Eliminate Fraud and the enactment of the One Big Beautiful Bill Act (H.R. 1), which heightens financial accountability for erroneous Medicaid payments. Although H.R. 1 never uses the phrase "payment prevention," its provisions create stronger incentives for states to reduce payment errors before they occur instead of relying primarily on post-payment recovery.
Fraud continues to receive significant attention, but it accounts for only a portion of Medicaid's improper payment problem.
The Centers for Medicare & Medicaid Services (CMS) has consistently reported through its Payment Error Rate Measurement (PERM) Program that most Medicaid improper payments result from insufficient documentation, eligibility issues, or administrative deficiencies rather than confirmed fraud or abuse. CMS has repeatedly explained that the improper payment rate should not be interpreted as a fraud rate.
That distinction has important policy implications.
For more than twenty years, the Government Accountability Office has identified Medicaid as a High-Risk program because of persistent improper payment concerns. During that period, oversight activities have expanded considerably, yet payment errors continue because many originate during eligibility verification, coverage validation, and claims processing—not during fraudulent schemes.
H.R. 1 increases the financial importance of making accurate payment decisions the first time.
Beginning in federal fiscal year 2030, the legislation limits the Department of Health and Human Services' authority to waive repayments for certain excessive erroneous Medicaid payments while broadening the circumstances under which some payments may be classified as erroneous. Those changes increase the financial consequences for states with elevated payment error rates and reinforce the value of preventing mistakes before claims are adjudicated.
The Bipartisan Policy Center provides a useful overview of how these provisions affect PERM accountability.
Because Medicaid is the payer of last resort, agencies and managed care organizations must determine whether another insurer is legally responsible before Medicaid pays a claim. Commercial insurance, Medicare, employer-sponsored coverage, TRICARE, and other liable third-party coverage all must be considered when adjudicating claims.
When that information is incomplete or outdated, Medicaid may incorrectly pay claims that should have been submitted to another payer. Even if those payments are later recovered, PERM evaluates whether the original payment decision was accurate at the time of adjudication. Recovery generally does not eliminate the improper payment finding.
For that reason, accurate third-party liability (TPL) information, effective coordination of benefits (COB), and high-quality eligibility data have become increasingly important components of Medicaid payment integrity.
Recovery efforts remain indispensable to protecting Medicaid resources.
Medicaid Fraud Control Units continue to investigate fraud, prosecute wrongdoing, and recover billions of taxpayer dollars each year. Those efforts remain an essential part of maintaining public trust in the Medicaid program.
At the same time, recovery is fundamentally retrospective. By the time an investigation begins, an improper payment has already occurred.
Preventing payment errors before claims are paid offers a more efficient approach. Every avoided improper payment reduces administrative costs, limits recovery efforts, improves audit performance, and allows agencies to devote more resources to program administration instead of correcting preventable mistakes.
Modern Medicaid programs increasingly recognize that better payment decisions require better information.
Many traditional third-party liability programs rely on monthly or quarterly eligibility files to identify other insurance coverage. While those processes continue to provide value, they may not capture coverage changes that occur between reporting cycles. As a result, Medicaid may unknowingly pay claims that should have been billed to another insurer.
To improve payment accuracy, agencies and managed care organizations are adopting technologies that continuously verify eligibility and identify liable third-party coverage before claims are processed.
Automated Algorithmic Analysis and Insurance Discovery Engines (AAAIDE), including solutions developed by Syrtis Solutions, continuously analyze eligibility and coverage data to identify active commercial insurance, Medicare, TRICARE, and other liable third-party coverage that may not appear in traditional eligibility files. Providing more complete and timely coverage information before adjudication helps strengthen payer-of-last-resort compliance while reducing avoidable improper payments.
Additional modernization initiatives include:
Together, these capabilities enable organizations to improve payment accuracy while shifting from traditional pay-and-chase recovery toward proactive cost avoidance.
Medicaid program integrity is evolving beyond a recovery-focused model. Audits, investigations, and enforcement will continue to play an important role, but they are increasingly being complemented by technologies and processes that improve payment accuracy before claims are paid.
Payment Prevention is no longer simply an emerging concept—it is becoming the foundation of modern Medicaid payment integrity. As H.R. 1 increases accountability for erroneous payments, organizations that emphasize accurate data, proactive verification, and continuous identification of liable third-party coverage will be better positioned to reduce improper payments, strengthen compliance with Medicaid's payer-of-last-resort requirements, improve audit performance, protect taxpayer resources, and support the long-term sustainability of the Medicaid program.
Syrtis Solutions distributes a monthly Medicaid news digest designed to keep policymakers and healthcare leaders informed. The summary highlights key developments in Medicaid program integrity, coordination of benefits, cost avoidance, and efforts to prevent improper payments, fraud, waste, and abuse. Below is a summary of last month’s news.
Automated algorithmic analysis and insurance discovery engines (AAAIDE) are becoming cornerstones of modern Medicaid operations. By identifying liable third-party coverage at the point of claim adjudication, these technologies reduce improper payments, strengthen payment accuracy, and improve coordination of benefits.
This priority is now reflected in state policy. On June 10, 2026, Ohio passed Senate Bill 315, which requires the Ohio Department of Medicaid to use automated algorithmic analysis and insurance discovery engines before making any Medicaid payment. The measure reflects a broader regulatory shift toward prevention over post-payment recovery.
Under the One Big Beautiful Bill Act (HR1), states must maintain improper payment rates below 3% by federal fiscal year 2030, measured through PERM audits that flag claims where Medicaid was billed as primary despite active third-party coverage. Critically, PERM audits measure compliance at the point of adjudication: once a claim is paid improperly, recovery cannot reverse the improper payment designation. Only point-of-claim insurance discovery prevents both the improper payment and the HR1 compliance risk simultaneously. Traditional post-payment recovery addresses cost but not compliance.
Long before this legislative requirement, Syrtis Solutions was delivering these capabilities to Medicaid managed care organizations nationwide. ProTPL, Syrtis' proprietary platform, continuously analyzes claim-level eligibility and coverage data to identify active commercial insurance, Medicare, and other liable third-party coverage at the point of adjudication, surfacing coverage that traditional monthly or quarterly eligibility files miss entirely.
This point-of-claim approach improves coordination of benefits, supports cost avoidance initiatives, and directly addresses PERM audit compliance. As Medicaid programs face HR1 improper payment standards and deadline pressure, real-time insurance discovery has become essential to compliance strategy.
About Syrtis Solutions: Syrtis Solutions provides insurance discovery, coordination of benefits, and payment integrity solutions for Medicaid agencies and Medicaid managed care organizations. Through ProTPL, Syrtis helps clients identify previously unknown commercial coverage, optimize third-party liability routing, and support PERM compliance while helping clients meet Medicaid's payer-of-last-resort requirements.
For more information, contact: Steve Konsin, Jr. 866-960-9358 info@syrtissolutions.com www.syrtissolutions.com
