Explaining SNAP, Medicaid error rates

by Niki Kelly, Indiana Capital Chronicle
March 13, 2026

It’s all about the errors.

Indiana lawmakers fear a heavy financial blow if they don’t reduce errors in the state’s food and health care assistance programs. That’s why they recently passed legislation with more eligibility checks and other regulatory requirements.

“With Medicaid costs exploding by an unsustainable $5 billion over just four years, we have a fiscal and moral duty to stop the bleeding,” said Sen. Chris Garten, R-Charlestown. “We are restoring integrity to the system to ensure that these programs remain solvent and available for the Hoosiers who truly need them, while shutting the door on fraud and inefficiency.”

But let’s be clear — errors aren’t necessarily synonymous with fraud. The fraud narrative in public assistance programs is growing and misleading at times.

Of course, there is fraud in all programs in life. There will always be a person out there trying to game a system or breaking laws.

But the majority of errors are misinterpretations of a rule, data entry mistakes or issues with missing paperwork. Errors include state overpayments and underpayments, too.

Indiana House backs bill with stricter verification for SNAP, Medicaid eligibility

The federal government currently covers all of the benefits Supplemental Nutrition Assistance Program participants, but that’s changing. Starting in 2028, states with error rates above 6% will be on the hook for some SNAP benefit costs. Indiana’s most recent error rate was 9.52%, which would correlate to a hit of $143 million a year.

There is a similar calculation for health care assistance: the Medicaid Payment Error Rate Measurement, or PERM. Last year’s reconciliation law requires states to be under 3% or face financial consequences.

In 2024, the Centers for Medicare and Medicaid Services highlighted that most improper payments were due to insufficient information in which a state or provider missed an administrative step. While this error does not indicate fraud or abuse, it is included in the PERM calculation.

KFF reports that Indiana’s most recent audit rate was 7.6%, joining 11 other states above a 3% threshold. That could cost the state $2 billion.

The Indiana Family and Social Services Administration has hired 65 people to provide additional oversight on SNAP and Medicaid applications before benefits are issued.

Sunshine Beam, director of the agency’s Division of Family Resources, said the agency pulls a snapshot of cases every month to review internally and noted errors are trending downward already.

A January FSSA memo said the state has made progress in reducing the number of improper payments: “Of note, an improper payment is not indicative of fraud. The improper payments identified by CMS largely constitute “incomplete documentation or no documentation provided.”

The Medicaid program is much larger than SNAP, involving millions of Hoosiers. The agency has issued a new request for proposal to beef up its fraud and abuse detention system.

“FSSA is committed to meeting this standard and ensuring that Indiana Medicaid continues to deliver high-quality, accountable care to those who need it most,” the memo said.

It is fair for lawmakers to be concerned about the massive potential penalties, and to build extra safeguards into the system. But advocates worry that the new hurdles will cause eligible Hoosiers to fall through the cracks.

I also hope everyone dials down the rhetoric on fraud. Not everything is fraud. Sometimes Hoosiers — and the state — simply make unintentional mistakes.

Indiana Capital Chronicle is part of States Newsroom, a nonprofit news network supported by grants and a coalition of donors as a 501c(3) public charity. Indiana Capital Chronicle maintains editorial independence. Contact Editor Niki Kelly for questions: info@indianacapitalchronicle.com.