81% of SNAP and Medicaid Audit Findings Come Down to One Thing. It's Not What You Think.
Most county HHS agencies are spending energy in the wrong place. The documentation gap — not the eligibility decision — is where error rate findings live.
When a federal reviewer flags an improper payment in a SNAP or Medicaid case, most people assume the underlying eligibility decision was wrong. The wrong person received benefits. The wrong amount was calculated. A verification step was skipped.
That assumption is rarely correct.
Across three consecutive PERM reporting cycles — the federal audit process that measures Medicaid improper payments — an average of 81% of findings resulted from insufficient documentation. Not from wrong decisions. From the inability to produce documentation sufficient to demonstrate that the decision was made correctly.
In many cases, the beneficiary was eligible. The verification was completed. The payment was appropriate. The finding occurred because the documentation wasn’t there when the reviewer asked for it.
This distinction matters for every county agency that administers SNAP or Medicaid eligibility — because it changes where the problem actually lives.
The Work Happened. The System Doesn’t Know It Happened.
Most county human services agencies have conducted quality reviews for decades. The challenge isn’t the existence of the review process. It’s the tools used to run it.
In the majority of counties, quality reviews still run on spreadsheets, email threads, and manually updated checklists. When a QA supervisor identifies an error, the finding goes out by email. The correction happens — or doesn’t — somewhere in an inbox. When a state or federal reviewer arrives and asks for documentation that a specific case error was identified, corrected, and closed, the answer requires reconstructing a trail from whatever pieces still exist.
That reconstruction takes hours. Sometimes days. Sometimes the trail isn’t there at all.
The work happened. The system doesn’t know it happened. That gap is where most error rate findings originate.
H.R. 1 Makes the Stakes Concrete
For years, error rates were primarily a compliance concern — important, but not immediately financial. H.R. 1 changed that.
Starting in 2028, states with SNAP payment error rates above 6% will begin sharing in the cost of federal benefit payments — up to 15% of total benefit costs. The FY2024 national SNAP payment error rate was 10.93%. Most county-administered states are already above the threshold.
For Medicaid, penalties begin in 2029 for states exceeding a 3% eligibility error rate. And H.R. 1 explicitly expands what counts toward those penalties to include insufficient documentation errors — the same category that drives 81% of current findings.
The financial exposure is real. But the documentation gap that drives it is largely within a county’s control. That’s the part most agencies haven’t fully recognized yet.
Three Questions Worth Asking Before a Reviewer Does
County leaders evaluating their quality review operations should work through three questions before the next state or federal review arrives.
1. What is your state’s current SNAP error rate, and what does it mean for your county?
If your state is already above 6%, the 2028 deadline is no longer a distant policy issue. Counties play a direct role in producing the documentation and review processes that support statewide compliance. The time to build those processes is before a federal reviewer asks for them — not after.
2. Does your quality review process create a complete, timestamped record?
Not a spreadsheet reconstructed the week before an audit. A record generated as part of the review process itself — showing which cases were reviewed, what findings were identified, what corrections were made, by whom, and when. If the answer is no, the documentation challenges that drive most improper payment findings may already exist inside your current process.
3. If state review criteria changed tomorrow, how quickly could your team update its process?
If updating review checklists requires IT involvement, administrative approval, or manual revisions across multiple documents, there’s a risk that reviews are being conducted against outdated standards. That’s a compliance exposure that program managers can address directly — if the tools support it.
The Documentation Gap Is Closable
The agencies that reduce their error rate exposure over the next two years won’t necessarily be the ones that change their eligibility policy or add caseworkers. They’ll be the ones that change how findings move, how corrections get documented, and how quickly that documentation is available when a reviewer asks.
That’s a process problem. And process problems are solvable.
Want the full picture?
The Documentation Gap white paper covers where error rates actually come from, how county quality review processes break down, and what a structured corrective action workflow looks like in practice. Includes the full data behind the 81% figure and a county example from North Carolina.
