Washington, D.C. — Medicaid programs across the United States paid more than $207 million in improper managed care payments for beneficiaries who were already deceased, according to a new report released by the Office of Inspector General (OIG) at the Department of Health and Human Services (HHS). Federal auditors say a newly enacted law could play a crucial role in preventing similar losses in the future.
The watchdog’s findings, which examined payments made between July 2021 and July 2022, represent the first comprehensive nationwide assessment of this issue. The report concluded that Medicaid agencies made $207.5 million in payments on behalf of deceased enrollees — money that should never have left government coffers.
“These types of improper payments are not unique to one state, and the issue continues to be persistent,” said Aner Sanchez, an assistant regional inspector general in the Office of Audit Services, who has studied the problem for nearly a decade. “This is a systemic challenge that requires stronger data coordination.”
A Persistent and Costly Problem
Medicaid, the joint federal-state program that provides health coverage to more than 80 million Americans, relies heavily on accurate beneficiary records. When enrollees die and are not promptly removed from state databases, managed care providers may continue receiving monthly payments, sometimes for months or even years.
Since 2016, the HHS inspector general has conducted 18 separate audits of selected state Medicaid programs. Those reviews identified nearly $289 million in improper managed care payments tied to deceased beneficiaries — underscoring how widespread and persistent the problem has been.
In its latest report, the OIG recommended that the federal government share more complete death data with states so they can identify deceased enrollees more quickly and recover funds that were wrongly paid.
At the center of that recommendation is the Full Death Master File, a Social Security Administration database containing more than 142 million death records dating back to 1899.
A Database Locked Behind Privacy Barriers
Despite its potential to save billions of dollars, access to the Full Death Master File has long been restricted because of privacy laws designed to prevent identity theft and fraud. As a result, many state Medicaid agencies have had only limited or delayed access to the data, making timely cross-checks difficult.
That may soon change.
A sweeping tax and spending package signed into law this summer by Donald Trump — known as Republicans’ One Big Beautiful Bill — includes a provision requiring states to quarterly audit their Medicaid beneficiary and provider lists against the Full Death Master File, starting in 2027.
Federal officials say the mandate is designed to stop payments to deceased individuals before they occur, rather than relying on costly and time-consuming recovery efforts after the fact.
“This provision could significantly improve accuracy and accountability,” the OIG report noted, adding that routine audits would strengthen oversight and reduce long-standing vulnerabilities in the Medicaid system.
Early Signs That It Can Work
There is already evidence that broader use of the death database can yield results. Earlier this year, the U.S. Treasury Department reported that it recovered more than $31 million in improper federal payments made to deceased individuals during a five-month pilot program.
The pilot was made possible after Congress granted the Treasury temporary access to the Full Death Master File for three years under the 2021 appropriations bill. Officials say the results demonstrated how powerful the database can be when agencies are allowed to use it effectively.
Complications and Controversies
However, the database itself has not been immune to controversy. The Social Security Administration has recently made unusual updates to the file, adding and removing records in ways that have complicated its use.
In April, the Trump administration directed the Social Security Administration to classify thousands of living immigrants as deceased — effectively canceling their Social Security numbers — as part of a broader crackdown on immigrants who were temporarily allowed to remain in the U.S. under programs initiated during the Biden administration. Critics warned that such actions could undermine trust in the accuracy of the database and create unintended consequences.
Still, federal auditors maintain that, despite these concerns, better access to death records remains one of the most effective tools for preventing waste and fraud in large entitlement programs.
What Comes Next
While the new law does not take effect until 2027, experts say states should begin preparing now by improving data-sharing agreements, updating eligibility systems, and strengthening internal audits.
“This is about protecting taxpayer dollars and ensuring Medicaid resources go to people who truly need them,” Sanchez said. “With the right safeguards, these payments are preventable.”
As Medicaid spending continues to grow and scrutiny over government waste intensifies, the success or failure of the new audit mandate could have far-reaching implications — not only for healthcare oversight, but for how federal and state agencies balance privacy concerns with fiscal responsibility.
