Medicare's FY2025 improper payment rate was 6.55% nationally, and the state rates in CMS's claim sample ranged from 1.6% in North Dakota to 18.5% in Wyoming. Among the 11 states where CMS reviewed more than 1,000 claims, the range ran from 4.4% in Massachusetts to 9.5% in Virginia. CMS published the state tables in its November 2025 supplemental data, which covers claims paid from July 1, 2023 through June 30, 2024.
An improper payment is a claim paid in the wrong amount, or paid without enough support in the record. Most of the national rate comes from missing or incomplete documentation.
The national rate in FY2025
CMS reported a 6.55% improper payment rate and a 93.45% accuracy rate for Medicare fee-for-service in FY2025. That is down from 7.66% in FY2024. CMS adjusted the headline figure by 0.20 percentage points, or $878.94 million, from 6.75% to account for inpatient claims that hospitals rebill under Part B.
The error categories moved in different directions. Insufficient documentation fell from 4.6% to 3.5% of payments. No documentation rose from 0.6% to 0.8%. Medical necessity errors fell from 1.2% to 1.0%, and incorrect coding fell from 0.8% to 0.7%. Insufficient documentation alone made up about 53.4% of the 2025 overall rate (3.5 of 6.55 points).
Improper payment rate by state
CMS's Table B8 covers 37,651 reviewed claims and $29,705.5 million in projected improper payments. The all-state rate in that table is 6.8%, with a 95% confidence interval of 6.1% to 7.4%. This figure is slightly higher than the 6.55% headline because Table B8 does not apply the Part A to B rebilling adjustment.
The table below shows every state with more than 1,000 reviewed claims. These are the states where the sample is large enough to say the most.
| State | Claims reviewed | Projected improper payments | Improper payment rate | 95% confidence interval |
|---|---|---|---|---|
| California | 4,542 | $4,135.0 million | 7.8% | 6.4% to 9.1% |
| Texas | 2,824 | $2,545.1 million | 9.2% | 7.4% to 10.8% |
| Florida | 2,774 | $2,172.1 million | 6.6% | 5.1% to 8.2% |
| New York | 2,089 | $1,716.9 million | 5.7% | 4.4% to 7.0% |
| Pennsylvania | 1,685 | $1,035.8 million | 6.0% | 4.6% to 7.3% |
| Illinois | 1,615 | $1,032.3 million | 5.5% | 3.8% to 7.2% |
| Ohio | 1,264 | $1,335.8 million | 8.6% | 2.2% to 14.9% |
| Massachusetts | 1,090 | $630.5 million | 4.4% | 3.0% to 5.8% |
| New Jersey | 1,081 | $1,132.5 million | 7.6% | 4.4% to 10.8% |
| North Carolina | 1,051 | $921.1 million | 8.5% | 1.3% to 15.7% |
| Virginia | 1,003 | $1,076.2 million | 9.5% | 2.4% to 16.6% |
Source: CMS, 2025 Medicare Fee-for-Service Supplemental Improper Payment Data, Table B8, November 2025. Rates are unadjusted for Part A to B rebilling.
Where the dollars are
California accounts for $4,135.0 million, or 13.9% of all projected improper payments. Texas follows at $2,545.1 million (8.6%), Florida at $2,172.1 million (7.3%) and New York at $1,716.9 million (5.8%). Those four states together hold about 35.6% of the national total.
A high dollar total and a high rate are different things. New York has the fourth-largest dollar total but a 5.7% rate, below the 6.8% all-state figure. Maryland ranks fifth in dollars at $1,439.3 million with a 12.0% rate. South Carolina's 13.7% rate comes with $914.7 million, or 3.1% of the national total.
Why the wide intervals matter
CMS builds Tables B8 to B11 from states with at least 30 sampled lines, and small samples produce wide ranges. Wyoming's 18.5% rate rests on 76 claims, and its interval runs from negative 7.0% to 44.1%, a span of 51.1 points. South Carolina's 13.7% comes from 656 claims with an interval of 0.7% to 26.7%. Maryland's 12.0% from 886 claims has an interval of 1.8% to 22.3%.
Compare that with California, where 4,542 claims give an interval of 6.4% to 9.1%, a span of 2.7 points. Massachusetts, with 1,090 claims, spans 2.8 points. A state's rank on a league table is only meaningful when its interval is narrow. Many of the high and low rates overlap the all-state interval of 6.1% to 7.4% once the interval is considered.
The low end shows the same pattern. North Dakota posted 1.6% on 103 claims, Oregon 1.8% on 337 claims, and Maine 2.1% on 131 claims. Tennessee's 3.6% rests on 985 claims and has a tighter interval of 2.2% to 5.1%.
Parts A and B only
Table B9 removes home health and hospice and is limited to Parts A and B. It covers 26,882 claims and $24,614.4 million in projected improper payments, a 6.4% rate with an interval of 5.7% to 7.0%. That table holds 82.9% of all improper payment dollars, so 17.1% sits in claim types outside it.
Several states look different in Table B9. California moves from 7.8% to 6.9%, and Texas from 9.2% to 8.0%. Florida stays near 6.5% and New York near 5.6%. In the other direction, South Carolina rises to 14.8% and Kentucky sits at 11.6% on 342 claims. Maryland is 11.8%, with an interval of 0.5% to 23.0%.
For a practice, Table B9 is the closer match, because office-based physician services are billed under Part B. Within the 6.55% national rate, Part B claims contributed 1.3 points from insufficient documentation and 0.4 points from incorrect coding.
Using the state number in practice
A state rate is context. It is not a score for your practice. Your own exposure depends on your specialty mix and the quality of your records, and the state table shows neither. Pull the denials and audit requests from the last 12 months and compare them to your claims count first.
The error mix gives a better target than the state ranking. With insufficient documentation behind 3.5 of the 6.55 points nationally, the record behind each billed service is where most of the exposure sits. In FY2024 that same category stood at 4.6%, so it fell 1.1 points in one year.
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