“One out of every $5 or $6 in Medicaid [payments] is improper.”

Russell Vought stated on June 1, 2025, in an interview on CNN’s “State of the Union.”

Responding to charges that President Donald Trump’s tax and spending bill would cut Medicaid coverage for millions of Americans, Trump administration officials misleadingly counter that it targets only waste, fraud, and abuse.

During an interview on CNN’s “State of the Union,” Russell Vought, the administration’s director of the Office of Management and Budget, framed Medicaid as sagging under the weight of improper payments.

An “improper” payment refers to payments made erroneously to beneficiaries and their providers or without sufficient documentation.

Pressed June 1 by CNN host Dana Bash about concerns that low-income Americans would suffer if the bill becomes law, Vought called such arguments “totally ridiculous.”

“This bill will preserve and protect the programs, the social safety net, but it will make it much more commonsense,” Vought said. “Look, one out of every $5 or $6 in Medicaid [payments] is improper.”

That would mean Medicaid’s improper payment rate is 16% to 20%.

In a 2024 report covering the years 2022, 2023, and 2024, Medicaid’s parent agency — the Centers for Medicare & Medicaid Services — said the rate was about 5.1%.

One conservative group, the Paragon Health Institute, said the agency has been using an incomplete calculation method and that the percentage could be as high as 25%. Other experts told PolitiFact that the actual numbers could be higher than what the federal government reports, although not as high as Paragon’s estimate.

The White House did not respond to an inquiry for this article.

How High Is the Medicaid Improper Payment Rate?

Medicaid and its closely related Children’s Health Insurance program provides health care and long-term care to roughly 83 million lower-income beneficiaries, accounting for about one-fifth of health care spending overall. It is funded through a mix of federal and state money and is administered by states under federal government rules.

Every year, the Centers for Medicare & Medicaid Services publishes official numbers for the share of improper Medicaid payments, and in other federal health insurance programs the agency oversees.

In a 2024 review of payments made in 2022, 2023, and 2024, the agency found that 5.09% of Medicaid payments totaling $31.10 billion were improper.

The 5.09% rate represented a decrease from the 8.58% rate cited in its 2023 report, which was also based on a three-year time span. The 2024 figure represented the third consecutive annual decline.

Are These Numbers Complete?

In March 2025, Brian Blase, a conservative health policy analyst and president of Paragon Health, a health policy think tank, co-authored a report that said the official CMS improper payment rate figures were unrealistically low for eight of the past 10 years, because in some years the agency failed to undergo widespread auditing of its beneficiaries’ Medicaid eligibility.

From 2017 to 2019, during Trump’s first term, Blase served as Trump’s special assistant for economic policy. Before that, he served as a health policy analyst for the Senate Republican Policy Committee and has worked for the Heritage Foundation, a conservative think tank.

The report said if the agency’s analysis had looked at eligibility checks every year, more ineligible beneficiaries and payments on their behalf would have been discovered. The report said this might have increased the improper payment rate as high as 25%, based on the rates found in 2020 and 2021, when a high number of eligibility checks were included in the agency’s methodology.

However, it’s hard to confirm whether lack of eligibility auditing caused higher improper payment rates in 2020 and 2021, said Jennifer Wagner, director of Medicaid eligibility and enrollment at the Center on Budget and Policy Priorities, a liberal think tank.

Wagner said Medicaid enrollment procedures have fluctuated, which could help explain the higher rates in some years rather than others. Using two years of data to generalize about trends across a decade, she said, is not necessarily valid.

Robert Westbrooks, the federal Pandemic Response Accountability Committee executive director who worked in government oversight roles during Democratic and Republican administrations, told PolitiFact it’s plausible that the officially reported improper payment rates for Medicaid could be too low.

However, Westbrooks said pinpointing how much higher the rate is in reality is a speculative process. “I don’t believe anyone can credibly quantify the [difference],” he said.

What Is an Improper Payment?

Health care experts emphasized that improper payments are not the same thing as waste, fraud, or abuse.

CMS maintains official definitions for these terms:

• Fraud: “When someone knowingly deceives, conceals, or misrepresents to obtain money or property from any health care benefit program.”
• Waste: “Overusing services or other practices that directly or indirectly result in unnecessary costs to any health care benefit program. Examples of waste are conducting excessive office visits, prescribing more medications than necessary, and ordering excessive laboratory tests.”
• Abuse: “When health care providers or suppliers perform actions that directly or indirectly result in unnecessary costs to any health care benefit program,” which can include overbilling or misusing billing codes.

By contrast, an improper payment “includes any payment to an ineligible recipient, any payment for an ineligible good or service, any duplicate payment, any payment for a good or service not received, and any payment that does not account for credit for applicable discounts,” KFF, a health information nonprofit that includes KFF Health News, wrote this year.

“Although all fraudulent payments are improper, not all improper payments are fraudulent,” said Jessica Tillipman, associate dean for government procurement law at George Washington University’s law school. “Most providers identify the improper payments and return them knowing how aggressively enforced” the legal provisions are. “When they don’t, they open the door to significant liability.”

CMS said about 79% of improper payments happened when there was insufficient documentation.

This typically involved cases in which a state or provider missed an administrative step, and it did not necessarily indicate fraud or abuse, the agency said. Instead, it could be an accidental oversight or mistake.

In other words, it was rare for ordinary beneficiaries to be scamming the government. “The vast majority of fraud in Medicaid is committed by providers or other actors, not enrollees,” Wagner said.

Our Ruling

Vought said that “one out of every $5 or $6 in Medicaid [payments] is improper.”

The official improper payment rate calculated by the Centers for Medicare & Medicaid Services in 2024 was about 5%, smaller than the 16% to 20% rate Vought described.

A health policy analyst and former Trump adviser said methodological shortcomings in the agency’s analysis could mean the rate is as high as 25%. Although it’s possible the rate is higher than the 5% the government reported, how much higher is speculative.

The statement contains an element of truth but ignores critical facts, namely the federal government’s own data. We rate the statement Mostly False.

Our Sources

Russell Vought, interview with CNN’s “State of the Union,” June 1, 2025.

Centers for Medicare & Medicaid Services, “Fiscal Year 2024 Improper Payments Fact Sheet,” Nov. 15, 2024.

Centers for Medicare & Medicaid Services, “PERM Error Rate Findings and Reports,” accessed June 4, 2025.

Centers for Medicare & Medicaid Services, “2024 Medicaid & CHIP Supplemental Improper Payment Data,” accessed June 4, 2025.

Paymentaccuracy.gov, “Annual Improper Payments Datasets,” accessed June 3, 2025.

KFF, “5 Key Facts About Medicaid Program Integrity — Fraud, Waste, Abuse and Improper Payments,” March 18, 2025.

KFF, “Virtual Event Transcript — The Health Wonk Shop: Understanding Fraud and Abuse in Medicaid,” April 24, 2025.

Paragon Health Institute, “Medicaid’s True Improper Payments Double Those Reported by CMS,” March 3, 2025.

Government Accountability Office, “Improper Payments: Information on Agencies’ Fiscal Year 2024 Estimates,” March 11, 2025.

Email interviews with Tammie Smith and Craig Palosky, spokespersons for KFF, June 2, 2025.

Email interview with Jennifer Wagner, director of Medicaid eligibility and enrollment at the Center on Budget and Policy Priorities.

Email interview with Jessica Tillipman, associate dean for government procurement law at George Washington University’s law school, June 3, 2025.

Email interview with Robert Westbrooks, Pandemic Response Accountability Committee executive director who worked in government oversight roles during Democratic and Republican administrations, June 3, 2025.

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This article first appeared on KFF Health News and is republished here under a Creative Commons license.

President Donald Trump expressed high hopes for an executive order to reduce drug prices.

On May 11, the day before he held a White House event to sign the executive order, Trump posted on Truth Social, “Prescription Drug and Pharmaceutical prices will be REDUCED, almost immediately, by 30% to 80%.”

However, the executive order’s text, unveiled May 12, undercut the president’s description of how soon consumers could experience this potential boon.

The idea of the executive order, he said, was to lower high prescription drug costs in the U.S. to levels more typical in other countries.

“We’re going to equalize,” Trump said at the order signing. “We’re all going to pay the same. We’re going to pay what Europe’s going to pay.”

Experts said Trump’s action could lower the cost of prescription drugs, perhaps by the 30% to 80% Trump said, but they cautioned that the order’s required procedural steps would make it far from an immediate fix.

The executive order says that within 30 days, administration officials must determine and communicate to drugmakers “most-favored-nation price targets,” to push the companies to “bring prices for American patients in line with comparably developed nations.”

After an unspecified period of time, the administration will gauge whether “significant progress” toward lower pricing has been achieved. If not, the order requires the secretary of Health and Human Services to “propose a rulemaking plan to impose most-favored-nation pricing,” which could take months or years to take effect.

“Executive orders are wish lists,” said Joseph Antos, a senior fellow emeritus in health care policy at the conservative American Enterprise Institute. The order “hopes that manufacturers will unilaterally lower U.S. prices. The legal authority to intervene in the market is unclear if this implausible scenario doesn’t happen.”

When contacted for comment, the White House did not provide evidence that the executive order would provide immediate results.

Why Do Americans Pay More for Prescriptions?

There is wide agreement that drug prices are unusually high in the U.S. The prices Americans pay for pharmaceuticals are nearly three times the average among a group of other industrialized countries in the Organization for Economic Cooperation and Development.

A study by the Rand Corp., a nonpartisan research organization, found that, across all drugs, U.S. prices were 2.78 times as high as the average prices across 33 OECD countries. The gap was even wider for brand-name drugs, with U.S. prices averaging 4.22 times as much.

The U.S. has lower prices than comparable nations for unbranded, generic drugs, which account for about 90% of filled prescriptions in the U.S. But generics account for only a fifth of U.S. prescription drug spending.

Experts cite several reasons for this pricing discrepancy.

One is that the U.S. has more limited price negotiation with drug manufacturers than other countries do. Often, if another country fails to find the extra cost of a new drug is justified by improved results, it’ll reject the drug application. Some countries also set price controls.

Another factor is patent exclusivity. Over the years, U.S. pharmaceutical companies have used strong legal protections to amass patents that can keep generic competitors from the marketplace.Drug companies have also argued that high prices help pay for research and development of new and improved pharmaceuticals. When Trump released the executive order, Stephen J. Ubl, president and CEO of the drug industry group Pharmaceutical Research and Manufacturers of America, said in a statement, “It would mean less treatments and cures and would jeopardize the hundreds of billions our member companies are planning to invest in America.” (In Trump’s May 13 interview with Fox News’ Sean Hannity, Trump offered a different picture of what drug company officials have told him; he said they agreed “it’s time” to lower U.S. prices.)

Recent studies have cast doubt on the idea that high prices pay for research and development. A 2023 study found that from 1999 to 2018, the world’s 15 largest biopharmaceutical companies spent more on selling and general administrative activities, which include marketing, than on research and development. The study also said most new medicines developed during this period offered little to no clinical benefit over existing treatments.

The long-standing reality of high U.S. drug prices has driven Democratic and Republican efforts to bring them down. Then-President Joe Biden signed legislation to require Medicare, the federal health care program that covers Americans over 65, to negotiate prices with the makers of some popular, high-cost medicines. And Sen. Bernie Sanders (I-Vt.) has made lowering drug prices a cornerstone issue during his political career.

During his first term, Trump sought to lower prices for certain drugs under Medicare, but the courts blocked the move on procedural grounds.

Trump’s drug-price push could attract bipartisan support, experts said.

Jonathan Cohn, who has worked for several left-of-center media outlets and wrote two books on health care policy, offered measured praise for Trump’s executive order in The Bulwark, a publication generally critical of Trump, calling it “a serious policy initiative, one that credible people think could bring some relief on drug prices.”

Andrew Mulcahy, a Rand Corp. senior health economist, said one part of Trump’s statement — the possibility of a 30% to 80% price reduction — is plausible.

“Of course, the devil’s in the policy design and implementation details,” Mulcahy said. “But at first blush, a savings of roughly two-thirds on what we spend now for drugs seems in line” with what Rand’s research has shown.

What Would Trump’s Executive Order Do?

Referring to high U.S. drug prices, Trump told Hannity that “I ended it” by issuing the executive order. But that’s not how the order is structured.

The executive order makes plain that any actions will not happen quickly.

“That ‘almost’ in ‘almost immediately’ is doing a lot of work,” Mulcahy said, referring to Trump’s statement.

The executive order also could face court challenges, just as Trump’s first-term executive order did.

“It seems unlikely that the federal government can set prices for drugs outside of the Medicare program,” Antos said. If Trump wants reduced prices to benefit all U.S. consumers, experts said, Congress will likely have to pass new legislation. While executive orders direct federal agencies what to do, requiring action from privately owned companies likely would require legislation passed by Congress, experts said.

If Congress gets involved, that will not only tack on extra time, but it also could draw opposition from the Republican majority in one or both chambers. Historically, Antos said, “federal price controls are anathema for many Republicans in Congress.”

Our Ruling

Trump said that, because of his new executive order, prescription drug prices would be reduced “almost immediately.”

Experts said that if the goals of the executive order are achieved, price reductions would not happen “almost immediately.”

The order sets out a 30-day period to develop pricing targets for drugmakers, followed by an unspecified amount of time to see if companies achieve the targets. If they don’t, a formal rulemaking process would begin, requiring months or even years. And if Trump intends to lower prices for all consumers, not only those who have federal coverage such as Medicare, Congress will likely have to pass a law to do it.

Trump gives the impression that Americans will shortly see steep decreases in what they pay for prescription drugs. But even if the executive order acts as intended — which would require a lot to go right — it could take months or years.

The statement contains an element of truth but ignores evidence that would give a different impression. We rate it Mostly False.

Sources

Donald Trump, Truth Social post, May 11, 2025

White House, “Delivering Most-Favored-Nation Prescription Drug Pricing to American Patients,” May 12, 2025

Rand Corp., “International Prescription Drug Price Comparisons: Estimates Using 2022 Data,” February 2024

Government Accountability Office, “U.S. Prices for Selected Brand Drugs Were Higher on Average Than Prices in Australia, Canada, and France,” March 2021

The BMJ, “High Drug Prices Are Not Justified by Industry’s Spending on Research and Development,” Feb. 15, 2023

Pharmaceutical Research and Manufacturers of America, “PhRMA Statement on Most Favored Nation Executive Order,” May 12, 2025

USA Today, “RFK Jr. Spars With Bernie Sanders Over Who Did Most To Curb Prescription Drug Prices,” May 12, 2025

The Associated Press, “Trump Plan To Curb Drug Costs Dealt Setback in Court,” Dec. 23, 2020

The Associated Press, “White House Says Prescription Drug Deals Will Produce Billions in Savings for Taxpayers, Seniors,” Aug. 15, 2024

PolitiFact, “For the Most Part, the US Pays Double for Prescriptions Compared With Other Countries, as Biden Says,” March 4, 2024

Email interview with Joseph Antos, senior fellow emeritus in health care policy at the American Enterprise Institute, May 12, 2025

Email interview with Andrew Mulcahy, senior health economist with Rand Corp., May 12, 2025