AI-Assisted Preauthorization Review Could Cut SNAP Payment Error Costs

arXiv:2611.03213v1 Announce Type: cross Abstract: New federal legislation will require states with high payment error rates in the Supplemental Nutrition Assistance Program (SNAP) to pay a share of benefit costs, potentially costing some states over a billion dollars per year. These costs create substantial pressure to improve payment accuracy. One strategy to improve payment accuracy is preauthorization review, in which staff double-check applications and correct mistakes before benefits are issued. But limited staff capacity makes it important to target these reviews effectively. One leading targeting approach uses statistical risk models to prioritize cases likely to contain errors. Another novel approach uses AI to flag specific potential discrepancies for reviewers to check. For states under pressure to reduce error rates, it is unclear which approach-or combination of approaches-would reduce payment error rates most effectively. We compare these strategies through simulations using public SNAP quality control data. Under our main assumptions, risk-based review alone costs about seven times as much as combining AI flags with risk scores. This cost advantage persists across a wide range of plausible assumptions. Our findings suggest that AI-assisted preauthorization review could be a key tool to help states avoid substantial cost-sharing obligations.