OIG Audit: Medicaid Agencies Made $207M in Unallowable Payments for Deceased Enrollees

The HHS Office of Inspector General (OIG) has issued an audit report estimating that Medicaid agencies made $207,501,380 in unallowable capitation payments to managed care organizations (MCOs) for enrollees who had already died before the service period covered by the payments. This finding is based on a review of 100 sampled payments, of which 99 were determined to be unallowable, with 49 not having been recovered by the agencies prior to the audit.

The OIG recommends that the Centers for Medicare & Medicaid Services (CMS) provide the affected Medicaid agencies with matched T-MSIS data to facilitate the recovery of these unallowable payments and to explore opportunities to ensure proper implementation of the One Big Beautiful Bill Act (OBBB Act). CMS has concurred with the first recommendation and indicated planned actions for both, with an expected update on recommendation implementation by June 21, 2026. While no direct penalties are stated for the agencies in this report, the findings highlight significant financial mismanagement and the potential for substantial recovery of federal funds.