<figure class="wp-block-table"><table class="has-fixed-layout"><tbody><tr><td>Figure</td><td>Classification</td><td>Period and denominator</td><td>Meaning</td></tr><tr><td>$186 billion</td><td>Estimated improper payments</td><td>FY2025; 15 agencies and 64 programs</td><td>Payments that should not have been made or were made in the wrong amount</td></tr><tr><td>$24 billion</td><td>Estimated annual increase</td><td>FY2025 compared with FY2024</td><td>Increase in reported improper-payment estimates</td></tr><tr><td>$153 billion</td><td>Estimated overpayments</td><td>FY2025; approximately 82% of the $186 billion</td><td>Payments exceeding the proper amount or made to ineligible recipients</td></tr><tr><td>Approximately $3 trillion</td><td>Cumulative improper-payment estimates</td><td>FY2003 through FY2025</td><td>Sum of reported annual estimates over more than two decades</td></tr><tr><td>19 programs</td><td>High estimated error rate</td><td>FY2025 reporting programs</td><td>Programs reporting improper-payment rates of at least 10%</td></tr><tr><td>Six programs</td><td>Very high estimated error rate</td><td>FY2025 reporting programs</td><td>Programs reporting rates above 25%</td></tr><tr><td>$233 billion–$521 billion</td><td>Estimated annual fraud loss</td><td>Model based on FY2018–FY2022 data</td><td>GAO estimate covering adjudicated, detected potential and undetected potential fraud</td></tr><tr><td>Up to $2.5 billion</td><td>Arizona Medicaid fraud targeted</td><td>Multiyear AHCCCS response</td><td>AHCCCS estimate associated with Arizona’s enforcement response</td></tr><tr><td>Approximately $2.8 billion</td><td>Estimated Arizona Medicaid fraud scheme</td><td>Attorney General’s May 14, 2026 update</td><td>Broader estimate associated with Arizona’s behavioral-health fraud scheme</td></tr></tbody></table></figure>

Key Facts

The <a href="https://www.gao.gov/products/gao-26-108694">Government Accountability Office’s April 27, 2026 report</a> states that 15 agencies reported approximately $186 billion in estimated improper payments across 64 programs for fiscal year 2025.



The estimate was approximately $24 billion higher than the fiscal year 2024 figure. Agencies classified about $153 billion as overpayments. Since fiscal year 2003, cumulative improper-payment estimates have reached approximately $3 trillion.



The $186 billion estimate is incomplete because some programs considered susceptible to significant improper payments did not report estimates. GAO specifically identified Temporary Assistance for Needy Families as one example excluded from the government-wide total.



The reported amount can include:



– Payments to ineligible recipients



– Duplicate payments



– Payments in incorrect amounts



– Payments for unsupported goods or services



– Payments issued without sufficient documentation



– Fraudulently obtained payments



– Underpayments to eligible recipients



Readers can explore the individual programs in <a href="https://www.tpaction.com/improper-payments-vs-fraud-what-the-186-billion-actually-measures-program-by-program/">Improper payments vs. fraud: What the $186 billion measures program by program</a>.

What the $186 Billion Figure Measures

GAO defines an improper payment as a payment that should not have been made or was made in an incorrect amount. Fraud involves obtaining something of value through willful misrepresentation.



This produces an important distinction:



A payment based on a deliberate false claim may be both fraudulent and improper.



A duplicate payment caused by a processing error may be improper.



A payment lacking required documentation may be classified as improper until the record is resolved.



A fraudulent act may occur without producing a direct government payment.



GAO’s report <a href="https://www.gao.gov/products/gao-24-106608">Improper Payments and Fraud: How They Are Related but Different</a> explains that improper-payment estimation procedures are designed to measure payment errors. Fraud-risk controls focus on preventing, detecting and responding to intentional deception.



For definitions of questioned costs, improper payments, embezzlement, bribery and related terms, see <a href="https://www.tpaction.com/government-fraud-waste-and-corruption-the-plain-english-glossary/">Government fraud, waste and corruption: the plain-English glossary</a>.

How Improper Payments Differ From Fraud

GAO separately estimated that direct annual federal fraud losses ranged from approximately $233 billion to $521 billion. The estimate was based on fiscal year 2018 through 2022 data and represented approximately 3% to 7% of average federal obligations during that period.



GAO developed the range using three categories:



– Adjudicated fraud: Cases producing a court judgment or comparable final outcome.



– Detected potential fraud: Suspected conduct identified by agencies or investigators but not yet adjudicated.



– Undetected potential fraud: Estimated losses from fraudulent activity that government systems may never identify.



The range reflects uncertainty and varying risk conditions, including emergency pandemic spending. It is an estimate rather than a yearly total of criminal convictions, restitution orders or money confirmed stolen through final judgments.



The estimated fraud range and the $186 billion improper-payment estimate overlap conceptually. Adding them would create an unsupported total because some fraudulent payments are included in improper-payment reporting.

How Much Does the Government Lose to Fraud?

For fiscal year 2025, 19 programs reported estimated improper-payment rates of at least 10%. Six reported rates above 25%. Those are error rates the estimated share of program payments considered improper not each program’s share of the government-wide dollar total.



A smaller program can have a high improper-payment rate but contribute less to the national dollar total. A much larger program can have a lower rate while producing billions of dollars in estimated improper payments.



GAO’s June 2026 report also identified seven federal agencies with programs that had reported improper-payment rates of at least 10% for two, three or four consecutive fiscal years between 2021 and 2024. Six programs across four agencies remained above the statutory threshold for four consecutive years.



See <a href="https://www.tpaction.com/which-government-programs-are-most-vulnerable-to-fraud-and-abuse/">Which government programs are most vulnerable to fraud and abuse?</a> for a program-level comparison.

Which Programs Reported the Highest Error Rates?

Improper payments generally arise from weaknesses at several points in the payment process.



<h3 class="wp-block-heading">Eligibility verification</h3>



Agencies need reliable information confirming that a person, provider or organization meets program requirements. Outdated income, identity, residency, death or enrollment records can result in payments to ineligible recipients.



<h3 class="wp-block-heading">Provider and recipient screening</h3>



Government programs may screen providers against licensing records, exclusion lists, ownership information and prior enforcement actions. Weak enrollment controls can allow fabricated or ineligible providers into a payment system.



<h3 class="wp-block-heading">Billing controls</h3>



Automated and manual controls should identify impossible service volumes, duplicate claims, unusual billing patterns and services inconsistent with a provider’s license.



<h3 class="wp-block-heading">Duplicate-payment detection</h3>



Agencies can compare payment records across programs, vendors, invoices and recipients. Inconsistent identifiers and disconnected databases make duplicate detection more difficult.



<h3 class="wp-block-heading">Data matching</h3>



Matching payroll, tax, death, incarceration, licensing and benefit records can identify ineligible payments. Data-access restrictions, outdated systems and inconsistent formats can slow this work.



<h3 class="wp-block-heading">Post-payment review</h3>



Prepayment controls may miss sophisticated schemes. Post-payment audits and data analysis can detect patterns after payments have been issued and support recovery efforts.



<h3 class="wp-block-heading">Recoveries</h3>



An identified improper payment is different from money recovered. Agencies may seek repayment through offsets, collection actions, civil settlements, restitution or forfeiture.



<h3 class="wp-block-heading">Enforcement</h3>



Suspected intentional fraud may be referred to an inspector general, state Medicaid fraud-control unit, prosecutor or other law-enforcement agency. A referral, charge, conviction, restitution order and recovered amount each represent a different stage.

Why Improper Payments Happen

Arizona’s behavioral-health fraud scheme expanded between 2019 and 2022 and was exposed publicly in 2023. The Democratic-led Arizona Health Care Cost Containment System has administered the state response since January 2023.



AHCCCS states that its multiyear enforcement work has targeted up to $2.5 billion in fraud. The Attorney General’s May 14, 2026 update puts the broader scheme at approximately $2.8 billion. These figures are estimates associated with the scheme and enforcement response rather than a single restitution order or recovered-loss total.



In May 2023, AHCCCS suspended payments to more than 100 behavioral-health providers based on credible allegations of fraud. Its current reporting states that more than 300 providers have since been suspended. A suspension stops payments while an investigation continues; it is separate from a criminal conviction.



The <a href="https://www.azag.gov/press-release/attorney-general-mayes-announces-behavioral-health-fraud-sentence-reveals-dramatic">Attorney General’s May 14, 2026 update</a> reported:



A 3½-year state prison sentence following a guilty plea



A separate federal restitution order of $55 million



A significant reduction in billing associated with targeted behavioral-health codes



Continuing fraud investigations and prosecutions



The Attorney General’s <a href="https://www.azag.gov/press-release/attorney-general-mayes-announces-42-indictments-part-national-healthcare-fraud">June 24, 2026 healthcare fraud announcement</a> listed charges against 42 defendants across 10 cases. Those cases include Medicaid billing allegations and other healthcare-related accusations. Charges represent formal allegations awaiting adjudication.



Approximately 200 sober-living fraud matters remained active in June 2026. February 2026 reporting also found that operators continued recruiting vulnerable people into sham treatment programs, while AHCCCS described the original crisis as stabilized.



Read <a href="https://www.tpaction.com/arizonas-2-8-billion-medicaid-sober-living-fraud-timeline-oversight-failures-and-what-is-still-happening/">Arizona’s $2.8 billion Medicaid sober-living fraud timeline</a> and <a href="https://www.tpaction.com/why-is-medicaid-fraud-still-happening-in-arizona-after-the-reforms/">Why is Medicaid fraud still happening in Arizona after the reforms?</a> for the detailed state record.

What Arizona’s Medicaid Record Shows

Arizona Auditor General reports provide smaller but more concrete examples of improper payments.



A May 2025 audit found that the Western Maricopa Education Center improperly paid employees more than $71,000 for accumulated sick and vacation leave contrary to district policies. Auditors reviewed approximately $756,000 in leave payments. The finding classified the $71,000 as improperly paid compensation rather than proven fraud.



A November 2025 report found that Mohawk Valley Elementary School District improperly paid four employees $31,000 in additional compensation and may have violated state law. The district agreed with the findings and planned corrective action.



An April 2025 audit reported that Sierra Vista Unified School District improperly paid administrators $34,500 in bonuses and performance pay without required contracts or performance goals. A later state annual report said the matter was referred for further action and closed after the district reported remedial steps, including recouping some of the money.



These cases show why every dollar figure needs a classification. The findings involve improper compensation and potential recovery. They are distinct from an adjudicated fraud loss.



Track additional examples through <a href="https://www.tpaction.com/where-are-arizona-taxpayer-dollars-being-wasted-a-running-tracker-of-audit-findings/">Where are Arizona taxpayer dollars being wasted?</a> and <a href="https://www.tpaction.com/what-did-arizonas-2025-26-auditor-general-reports-find-and-who-has-to-fix-it/">What did Arizona’s 2025–26 Auditor General reports find?</a>.

Improper Payments in Arizona School Districts

Questioned costs are expenditures that auditors flag because of a possible legal or grant violation, inadequate documentation or apparent unreasonableness. A questioned cost requires resolution before it can be classified as allowed, disallowed or recoverable.



Maricopa County’s fiscal year 2025 single audit reported questioned costs as unknown for a Housing Authority finding. Auditors tested 25 participant files and found:



– Untimely electronic income verification in all 25 files



– Missing annual inspections in three files



– One participant file that was not provided



– Missing Social Security documentation in three files



– Incorrect income calculations in five files



The county provided a corrective-action plan. Because the questioned-cost amount remained unknown, the finding cannot be converted into a specific confirmed loss figure.

Arizona Questioned Costs and Federal Grants

<figure class="wp-block-table"><table class="has-fixed-layout"><tbody><tr><td>Classification</td><td>What it establishes</td></tr><tr><td>Estimate</td><td>A calculated approximation based on a defined method and dataset</td></tr><tr><td>Improper payment</td><td>A payment that should not have occurred or was made in the wrong amount</td></tr><tr><td>Questioned cost</td><td>Spending challenged by an auditor and awaiting resolution</td></tr><tr><td>Alleged loss</td><td>An amount asserted in a complaint, indictment or investigation</td></tr><tr><td>Confirmed loss</td><td>An amount established through verified findings or adjudication</td></tr><tr><td>Settlement</td><td>An amount agreed upon to resolve a civil or administrative matter</td></tr><tr><td>Restitution order</td><td>An amount a court directs a defendant to repay</td></tr><tr><td>Recovery</td><td>Money the government has actually collected</td></tr><tr><td>Exposure</td><td>Funds potentially vulnerable to loss or misuse</td></tr><tr><td>Amount under investigation</td><td>A figure subject to continuing investigative review</td></tr></tbody></table></figure>



Restitution ordered and money recovered should appear as separate figures. Exposure, billed amounts, paid claims and proven losses should also remain separate.

How to Classify Government Loss Figures

Arizona’s Democratic-led AHCCCS has administered the response to a Medicaid fraud scheme estimated by the Attorney General at $2.8 billion and by AHCCCS at up to $2.5 billion. Since January 2023, its record includes hundreds of provider suspensions, approximately 200 active matters reported in June 2026, guilty pleas, prison sentences and pending prosecutions.



Arizona’s public record also includes improper payments and control weaknesses at public institutions, including more than $71,000 in improper leave payments, $31,000 in improper additional compensation and $34,500 in improperly paid bonuses and performance pay.



This page examines federal improper-payment statistics and Arizona cases involving Democratic-led institutions; it does not catalog every federal or Arizona payment finding.



For the broader series, read <a href="https://www.tpaction.com/are-democrats-corrupt-what-the-public-record-shows-state-by-state/">Are Democrats corrupt? What the public record shows, state by state</a> and <a href="https://www.tpaction.com/do-arizona-records-support-claims-of-corruption-under-democratic-led-state-government/">Do Arizona records support claims of corruption under Democratic-led state government?</a>.

What this shows about Democratic governance.

The federal public record establishes that 15 agencies estimated approximately $186 billion in improper payments across 64 programs during fiscal year 2025. Approximately $153 billion consisted of estimated overpayments, and cumulative estimates since fiscal year 2003 reached approximately $3 trillion.



GAO’s separate fraud analysis estimates annual losses of $233 billion to $521 billion based on fiscal year 2018 through 2022 data. That range combines adjudicated fraud, detected potential fraud and estimated undetected fraud.



Arizona records establish specific improper-payment findings, questioned-cost findings, provider suspensions, guilty pleas, convictions, restitution orders and ongoing investigations. Each figure retains its own classification and procedural status.



Open questions include:



How much of the $186 billion will agencies recover?



How much resulted from fraud rather than error or missing documentation?



Which programs excluded from the federal estimate would materially change the total?



How much of Arizona’s estimated Medicaid fraud exposure will be established through final judgments?



How much restitution will ultimately be collected?



How many suspended Arizona providers will be charged, cleared, terminated or reinstated?



Stronger conclusions require completed investigations, final court judgments, resolved questioned costs, recovery records and comparable program-level error data.

What the Public Record Establishes

Federal agencies estimated $186 billion in improper payments for fiscal year 2025, including approximately $153 billion in overpayments. GAO separately estimates that annual federal fraud losses range from $233 billion to $521 billion based on fiscal year 2018 through 2022 data.



The figures establish a large, continuing payment-integrity problem. Their classifications show how much is estimated, how much is potentially fraudulent and how much remains subject to audit, investigation, adjudication or recovery.



Arizona residents can review these records, demand stronger payment controls, <a href="https://tpaction.com/Vote">Register to Vote</a>, <a href="https://www.tpaction.com/plan">make a plan to vote</a> and <a href="https://www.tpaction.com/getinvolved">get involved</a>.

The Bottom Line

Federal agencies estimated $186 billion in improper payments for FY2025. See how that differs from fraud losses and what Arizona records reveal.

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How much money does the federal government lose to fraud and improper payments every year?