In U.S. statistics, “improper payments” include both outright fraud and payments made in error, and most of the total is in that error bucket rather than proven fraud.

“Error” here means the payment did not meet all program rules on paper, not necessarily that the person was ineligible or scamming the system.[1][5][6]

What “improper payment” means

• Federal law and OMB define an improper payment as any payment that should not have been made or was made in the wrong amount under program rules (including over‑ and under‑payments). ⭐ [2][4][5]
• CMS emphasizes that improper payments “do not necessarily represent expenditures that should not have occurred” and that most occur because of unintentional errors or missing documentation, not fraud.[1]

Common error‑type improper payments

Concrete examples

These are stylized, but match how CMS and GAO describe real cases:

• A Medicaid clinic really saw a child for therapy, but the provider forgets to include the signed progress note; auditors mark the claim improper for “insufficient documentation,” even though the child was legitimately eligible and treated.[1]
• A state worker correctly determines a family’s SNAP eligibility but fails to upload the income verification form; later review flags all related payments as improper because the state cannot prove it followed the official process.[5]
• A hospital bills Medicare for a 3‑day inpatient stay when the documentation only supports an observation‑level stay; the claim is reclassified as an overpaid improper payment due to incorrect coding/medical‑necessity documentation, not because the patient “faked” illness.[1]
• An unemployment insurance system glitches and issues two weekly payments instead of one; the second payment is an improper overpayment caused by processing error.[4][5]

How this differs from fraud

• Fraud is a deliberate scheme (false identity, fabricated services, kickbacks, bribes, etc.); these are still counted as improper payments, but they are a minority of the total.[5][1]
• The bulk of measured improper payments in programs like Medicare and Medicaid fall into documentation and process‑error categories—essentially compliance and record‑keeping failures inside complex systems, not classic “welfare cheating.”[7][6][1]

If you tell me which programs you care most about (Medicaid, UI, SNAP, SSI, etc.), I can walk through what “error‑type” improper payments typically look like in that specific system.

Sources [1] Improper Payments Fact Sheet - CMS https://www.cms.gov/newsroom/fact-sheets/improper-payments-fact-sheet [2] Improper Payments: Ongoing Challenges and Recent Legislative ... https://www.congress.gov/crs-product/R48296 [3] Addressing Improper Payments in the Public Sector | J.P. Morgan https://www.jpmorgan.com/insights/payments/security-trust/strategies-for-addressing-improper-payments [4] [PDF] Improper Payment Rate - workforcesecurity.doleta.gov https://oui.doleta.gov/unemploy/pdf/Overpayment_CauseDefinitions.pdf [5] [PDF] Improper and Erroneous Payments in the Federal Government https://www.ignet.gov/sites/default/files/files/committees/audit/EIPPosnPaper1102.pdf [6] What Exactly are “Improper Payments”? » Community | GovLoop https://www.govloop.com/community/blog/what-exactly-are-improper-payments/ [7] 5 Key Facts about Medicaid Program Integrity - KFF https://www.kff.org/medicaid/5-key-facts-about-medicaid-program-integrity-fraud-waste-abuse-and-improper-payments/