Trump Law Targets Medicaid Waste as States Pay the Dead

Paul Riverbank, 12/24/2025Trump-era law targets Medicaid waste—ending payments for the deceased, but challenges and errors persist.

Aner Sanchez, who serves as an assistant regional inspector general, has spent more than a decade pulling at this thread. “Not unique to one state, and the issue continues to be persistent,” she observed in a conversation with The Associated Press. It might sound astonishing, but according to the Department of Health and Human Services’ own watchdog, $207.5 million in so-called managed care payments landed in the wrong hands.

All of this stems from a deceptively simple cause: out-of-date records. Medicaid’s lists of eligible enrollees tend to lag behind reality—once someone dies, their name may linger quietly for months. As a result, the payment tap stays open. On paper, the fix seems obvious; in practice, it’s less so.

There is, in fact, a tool designed for this precise problem: the Full Death Master File, essentially the grand compendium of American mortality—tracking deaths since 1899. Yet using it to scrub Medicaid lists is far from straightforward. Strict privacy protections are meant to stave off fraud and identity theft, but in doing so, they also tie the hands of state and federal officials who might otherwise swiftly clean up their books.

Congress has finally begun nudging the system forward. Legislation inked into law by then-President Trump in the summer of 2023 now compels Medicaid agencies to cross-check their enrollee rosters with the Death Master File every three months—a new rule slated to become mandatory in 2027. The rationale is hard to argue with: curb erroneous payments, conserve public funds.

There’s proof that this approach can work, at least in short bursts. Earlier this year, the U.S. Treasury, operating under a temporary green light from Congress, recovered more than $31 million in about five months by leveraging access to the Death Master File. Of course, this trial run comes with a caveat: the permission is fleeting, lasting only three years. Still, it demonstrated the potential if agencies can consistently access and use high-quality, up-to-date data.

Keeping that central database current, however, brings its own headaches. The Social Security Administration continues to revise the database—adding and deleting records as new complexities arise. In one unusual example, a Trump-era crackdown on unauthorized immigrants resulted in some living individuals being flagged as deceased, an administrative misfire that only adds confusion to an already tangled process.

For families who find themselves wrongly denied Medicaid—sometimes because of these very quirks—the path to challenge the system is steep and rocky. An Oklahoma couple brought their dispute all the way to federal court after being turned away, arguing for their right to sue after being ruled ineligible for earning slightly too much. But federal courts, backed by the Supreme Court, held firm: the Medicaid Act doesn’t provide a private right to sue when it comes to payment eligibility.

At this juncture, federal auditors are urging closer collaboration between state and national officials. They say that, with the right balance of privacy and information-sharing, those mistaken payments could dwindle. It comes down to a mix of diligent list management, technological tools, and active oversight of administrative routines—to say nothing of patience.

Fixing a government bureaucracy is, predictably, often slow work, and the struggle to eliminate waste in Medicaid is the textbook example. Tuesday’s report from the inspector general marks the first comprehensive review of these improper payouts. With a series of audits stretching back to 2016, the sheer scale of the problem is hard to ignore. There is hope, though, as laws adapt and pressure for reform builds: each step, no matter how incremental, moves the system closer to ensuring that public money goes where it ought, and not to the ghosts the system struggles to leave behind.

For years, the labyrinthine world of government health spending has been leaking funds, often in the least expected places. One particularly persistent hole: payments for patients who, frankly, aren't around to receive care. Between 2021 and 2022 alone, Medicaid programs shelled out more than $200 million—money earmarked for individuals who had already passed away. These payments didn’t just vanish; health care providers actually received the funds, sometimes months after a patient's death. Unsurprisingly, it’s not just a glitch confined to one or two states; this has been, and continues to be, a nationwide woe.Aner Sanchez, who serves as an assistant regional inspector general, has spent more than a decade pulling at this thread. “Not unique to one state, and the issue continues to be persistent,” she observed in a conversation with The Associated Press. It might sound astonishing, but according to the Department of Health and Human Services’ own watchdog, $207.5 million in so-called managed care payments landed in the wrong hands.All of this stems from a deceptively simple cause: out-of-date records. Medicaid’s lists of eligible enrollees tend to lag behind reality—once someone dies, their name may linger quietly for months. As a result, the payment tap stays open. On paper, the fix seems obvious; in practice, it’s less so.There is, in fact, a tool designed for this precise problem: the Full Death Master File, essentially the grand compendium of American mortality—tracking deaths since 1899. Yet using it to scrub Medicaid lists is far from straightforward. Strict privacy protections are meant to stave off fraud and identity theft, but in doing so, they also tie the hands of state and federal officials who might otherwise swiftly clean up their books.Congress has finally begun nudging the system forward. Legislation inked into law by then-President Trump in the summer of 2023 now compels Medicaid agencies to cross-check their enrollee rosters with the Death Master File every three months—a new rule slated to become mandatory in 2027. The rationale is hard to argue with: curb erroneous payments, conserve public funds.There’s proof that this approach can work, at least in short bursts. Earlier this year, the U.S. Treasury, operating under a temporary green light from Congress, recovered more than $31 million in about five months by leveraging access to the Death Master File. Of course, this trial run comes with a caveat: the permission is fleeting, lasting only three years. Still, it demonstrated the potential if agencies can consistently access and use high-quality, up-to-date data.Keeping that central database current, however, brings its own headaches. The Social Security Administration continues to revise the database—adding and deleting records as new complexities arise. In one unusual example, a Trump-era crackdown on unauthorized immigrants resulted in some living individuals being flagged as deceased, an administrative misfire that only adds confusion to an already tangled process.For families who find themselves wrongly denied Medicaid—sometimes because of these very quirks—the path to challenge the system is steep and rocky. An Oklahoma couple brought their dispute all the way to federal court after being turned away, arguing for their right to sue after being ruled ineligible for earning slightly too much. But federal courts, backed by the Supreme Court, held firm: the Medicaid Act doesn’t provide a private right to sue when it comes to payment eligibility.At this juncture, federal auditors are urging closer collaboration between state and national officials. They say that, with the right balance of privacy and information-sharing, those mistaken payments could dwindle. It comes down to a mix of diligent list management, technological tools, and active oversight of administrative routines—to say nothing of patience.Fixing a government bureaucracy is, predictably, often slow work, and the struggle to eliminate waste in Medicaid is the textbook example. Tuesday’s report from the inspector general marks the first comprehensive review of these improper payouts. With a series of audits stretching back to 2016, the sheer scale of the problem is hard to ignore. There is hope, though, as laws adapt and pressure for reform builds: each step, no matter how incremental, moves the system closer to ensuring that public money goes where it ought, and not to the ghosts the system struggles to leave behind.