Medicaid paid more than $207 million for dead people. A new law could help fix that

WASHINGTON (AP) — Medicaid programs made more than $200 million in improper payments to health care providers between 2021 and 2022 for people who had already died, according to a new report from the independent watchdog for the Department of Health and Human Services.

But the department’s Office of Inspector General said it expects a new provision in Republicans’ One Big Beautiful Bill requiring states to audit their Medicaid beneficiary lists may help reduce these improper payments in the future.

These kinds of improper payments are “not unique to one state, and the issue continues to be persistent,” Aner Sanchez, deputy regional inspector general in the Office of Audit Services told The Associated Press. Sanchez has been researching this issue for a decade.

The watchdog report released Tuesday said more than $207.5 million in managed care payments were made on behalf of deceased enrollees between July 2021 to July 2022. The office recommends that the federal government share more information with state governments to recover the incorrect payments — including a Social Security database known as the Full Death Master File, which contains more than 142 million records going back to 1899.

Sharing the Full Death Master File data has been tightly restricted due to privacy laws which protect against identity theft and fraud.

The massive tax and spending bill that was signed into law by President Donald Trump this summer expands how the Full Death Master File can be used by mandating Medicaid agencies to quarterly audit their provider and beneficiary lists against the file, beginning in 2027. The intent is to stop payments to dead people and improve accuracy.

Tuesday’s report is the first nationwide look at improper Medicaid payments. Since 2016, HHS’ inspector general has conducted 18 audits on a selection of state programs and had identified that Medicaid agencies had improperly made managed care payments on behalf of deceased enrollees totaling approximately $289 million.

The government had some success using the Full Death Master File to prevent improper payments earlier this year. In January, the Treasury Department reported that it had clawed back more than $31 million in federal payments that improperly went to dead people as part of a five-month pilot program after Congress gave Treasury temporary access to the file for three years as part of the 2021 appropriations bill.

Meanwhile, the SSA has been making unusual updates to the file itself, adding and removing records, and complicating its use. For instance, the Trump administration in April moved to classify thousands of living immigrants as dead and cancel their Social Security numbers to crack down on immigrants who had been temporarily allowed to live in the U.S. under programs started during the Biden administration.