Watchdog: Big Beautiful Bill Reforms to Reduce Medicaid Fraud as More Than $207 Million Sent to Dead People

The Department of Health and Human Services (HHS) Office of Inspector General found that there were more than $200 million in improper Medicaid payments to dead people between 2021 and 2022, adding that the Big Beautiful Bill would likely reduce such payments.

The Office of Inspector General said that the Big Beautiful Bill’s provision requiring states to audit their Medicaid beneficiary lists is expected to reduce improper payments.

Aner Sanchez, assistant regional inspector general in the Audit Office, said that these types of improper payments are “not unique to one state, and the issue continues to be persistent.”

The report, released Tuesday, found that more than $207.5 million in managed care payments were made to deceased enrollees between July 2021 to July 2022. It recommended that “the federal government share more information with state governments to recover incorrect payments, including a Social Security database known as the Full Death Master File.” The Full Death Master File is restricted due to “privacy laws which protect against identity theft and fraud.”

The Associated Press reported:

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 Treasury Department has used the Full Death Master File to claw back more than $31 million in federal payments that improperly went to dead people.

The Big Beautiful Bill seeks to root out waste, fraud, and abuse by having those on the program verify eligibility for the program twice per year instead of the standard once a year.

One study found that Medicaid has doled out $1.1 trillion in improper payments over the last decade:

In only two out of the past 10 years did audits by the Centers for Medicare and Medicaid Services (CMS) assess the accuracy and completeness of state eligibility reviews. In those two years that did include meaningful, complete audits of state Medicaid programs, improper payment rates exceeded 25 percent. Applying a 25 percent improper payment rate across the $4.3 trillion of federal Medicaid spending between 2015 and 2024 yields roughly $1.1 trillion in federal Medicaid improper payments over the past decade. [Emphasis added]