Medicaid’s $200 Million in Payments for the Deceased: A Nationwide Concern
In a startling revelation, Medicaid programs disbursed over $200 million in erroneous payments to healthcare providers for individuals who had already passed away. This was highlighted in a recent report by the independent watchdog for the Department of Health and Human Services.
A new legislative measure, part of the Republicans’ One Big Beautiful Bill, mandates states to audit their Medicaid beneficiary lists, which might curb future improper payments, according to the department’s Office of Inspector General. The issue of such payments, as noted by Aner Sanchez, deputy regional inspector general in the Office of Audit Services, is not isolated to any single state and remains an ongoing challenge. Sanchez has been delving into this matter for the past decade.
The watchdog’s report, released on Tuesday, detailed that more than $207.5 million in payments were made under managed care for deceased enrollees from July 2021 to July 2022. To rectify this, the office suggests that the federal government should collaborate more closely with state governments to recover these erroneous payments. A potentially useful resource is the Social Security database, known as the Full Death Master File, which contains over 142 million records dating back to 1899.
However, due to privacy laws aimed at preventing identity theft and fraud, access to the Full Death Master File has been highly restricted. The expansive tax and spending bill, signed into law by President Donald Trump this summer, seeks to address this by allowing Medicaid agencies to conduct quarterly audits of their provider and beneficiary lists against the file starting in 2027. This initiative aims to halt payments to deceased individuals and enhance system accuracy.
This report marks the first comprehensive examination of improper Medicaid payments across the nation. Since 2016, the HHS inspector general has completed 18 audits on selected state programs, identifying that Medicaid agencies had incorrectly made managed care payments for deceased enrollees amounting to approximately $289 million.
There have been some successes in leveraging the Full Death Master File to avert improper payments. In January, the Treasury Department successfully reclaimed over $31 million in federal payments that were erroneously sent to deceased persons, as part of a five-month pilot program. This was made possible after Congress temporarily granted Treasury access to the file for three years under the 2021 appropriations bill.
Meanwhile, the Social Security Administration has been making unusual modifications to the file, such as adding and removing records. These changes have complicated its application. For example, in April, the Trump administration moved to classify thousands of living immigrants as deceased and cancel their Social Security numbers to tackle immigration issues related to programs initiated during the Biden administration.
