Between 2021 and 2022, Medicaid programmes made more than $207 million in managed care payments for deceased individuals. The finding, disclosed by the Office of Inspector General (OIG) for the Department of Health and Human Services (HHS), sheds light on a long-standing vulnerability in how state agencies verify enrollee eligibility.
According to the Associated Press, the OIG has been examining this issue for nearly a decade and has repeatedly found that such improper payments are “not unique to one state” but rather a persistent nationwide problem. The new federal provision, embedded within Republicans’ One Big Beautiful Bill, could finally provide a systematic solution by requiring states to audit their enrollee databases.
Federal Watchdog Uncovers Widespread Payment Errors
The OIG’s latest nationwide audit, released on Tuesday, revealed that more than $207.5 million in Medicaid managed care payments were made for individuals who had died between July 2021 and July 2022. This marks the first comprehensive national look at the issue, following 18 previous audits across select states since 2016. Those earlier investigations identified roughly $289 million in improper payments on behalf of deceased beneficiaries.
The OIG report recommends that the federal government expand the sharing of data with state Medicaid agencies to identify and recover such payments more effectively. One of the main tools involved is the Full Death Master File (DMF), a massive Social Security database containing more than 142 million records dating back to 1899. This file has historically been restricted due to privacy protections designed to prevent identity theft and fraud.
According to the HHS watchdog, broader access to the Full Death Master File could be instrumental in flagging and preventing further erroneous payments. By cross-referencing enrollee records against this file, states would be able to identify individuals who have died and terminate their benefits more promptly.
New Auditing Provision Could Tighten Oversight
The new law, signed by President Donald Trump earlier this year, expands how Medicaid agencies can use the Death Master File. Beginning in 2027, state Medicaid programmes will be required to conduct quarterly audits comparing provider and beneficiary lists to the file. The goal is to eliminate payments to deceased individuals and improve the overall accuracy of Medicaid spending.
According to the report, earlier government initiatives have already demonstrated the effectiveness of such measures. In January, the Treasury Department announced it had successfully recovered more than $31 million in improper payments made to deceased individuals during a five-month pilot programme. This initiative was enabled after Congress temporarily granted Treasury access to the Death Master File as part of the 2021 appropriations bill.
Yet the file’s integrity has been under scrutiny. The Social Security Administration (SSA) has made several updates to its contents, occasionally adding or removing records in ways that complicate its use. According to the Associated Press, one controversial update in April saw the Trump administration incorrectly classify thousands of living immigrants as deceased, revoking their Social Security numbers as part of an enforcement effort targeting immigration programmes.
While the OIG’s latest report underscores progress, it also reveals how systemic data management challenges can undermine both efficiency and accountability in public healthcare funding. The new auditing requirement represents a significant step towards closing those gaps, but implementation will depend on how effectively states and federal agencies can coordinate their data and oversight practices.
