A major new report has uncovered that Medicaid programmes in the United States made improper payments exceeding $207.5 million to healthcare providers for individuals who were already deceased. The findings, released by the Department of Health and Human Services' independent watchdog, highlight a systemic issue that a new federal law may now help to resolve.
A Persistent and Widespread Problem
The Office of Inspector General's report, published on Tuesday 23 December 2025, examined the period from July 2021 to July 2022. It found that managed care payments were incorrectly made on behalf of deceased enrollees across numerous states. Aner Sanchez, an assistant regional inspector general, emphasised that this problem is "not unique to one state, and the issue continues to be persistent," having researched the matter for a decade.
Since 2016, a series of 18 state-level audits had already identified approximately $289 million in similar improper payments. Tuesday's report marks the first comprehensive, nationwide analysis of this specific form of Medicaid waste.
The Legislative Fix: Unlocking a Critical Database
The watchdog's key recommendation is for the federal government to enhance data sharing with states to recover funds and prevent future errors. Central to this is the Full Death Master File, a Social Security Administration database containing over 142 million records dating back to 1899. Historically, privacy laws have tightly restricted access to this file to prevent identity theft and fraud.
However, a provision within the One Big Beautiful Bill—the massive tax and spending legislation signed by President Donald Trump in the summer of 2025—could change this. The new law expands authorised use of the Death Master File. It mandates that state Medicaid agencies must conduct quarterly audits of their provider and beneficiary lists against the file, beginning in 2027. The goal is to improve accuracy and halt payments to deceased persons.
Proven Success and Ongoing Complications
Evidence suggests this approach can work. In a five-month pilot programme earlier in 2025, the US Treasury Department, granted temporary access to the file, clawed back more than $31 million in federal payments wrongly sent to dead people.
Nevertheless, challenges remain. The Social Security Administration has been making unusual updates to the Death Master File, adding and removing records, which complicates its reliability. For instance, in April 2025, the Trump administration moved to classify thousands of living immigrants as deceased and cancel their Social Security numbers as part of a crackdown on immigration programmes initiated during the Biden administration.
The HHS Office of Inspector General expressed optimism that the new audit requirement, once implemented, will significantly reduce the volume of these improper Medicaid payments in the coming years.
