From Spotlight Delaware – Audit: Delaware paid millions for health care for the dead


This story was produced by Spotlight Delaware, a community-powered, collaborative, nonprofit newsroom covering the First State. Learn more at 

By  Jacob Owens

Why Should Delaware Care?
Medicaid coverage represents one of the single largest expenses in Delaware’s annual budget, totaling about a sixth of all spending in next year’s budget. A federal audit found issues with how the state office in charge of the program was verifying when Medicaid enrollees died.

A recent federal audit of Delaware’s Medicaid program found that the state improperly made millions of dollars in payments to care providers for a simple reason: the eligible patients had already died.

Delaware splits the cost of the health coverage program for low-income individuals with the federal government, paying about 28% of total costs compared to 72% for the federal Centers for Medicare & Medicaid Services (CMS). Next year, the state government expects to spend more than $1 billion on more than 300,000 covered enrollees.


Known as capitation payments, the Medicaid funding is a way of paying a set amount of money upfront to cover the predicted cost of all or some of the health care services for a specific patient over a certain period of time. Those payments are sent to managed care organizations (MCOs), which manage thousands of Medicaid program enrollees and work through coverage and payment to care providers like hospitals, family doctors and specialists.

Delaware’s Division of Medicaid and Medical Assistance (DMMA) currently contracts with three MCOs: Highmark Health Options Blue Cross Blue Shield, AmeriHealth Caritas and Centene.

The Office of the Inspector General for the U.S. Department of Health and Human Services, which oversees the Medicaid program, began a review of three years of Delaware records after finding similar issues in 15 other states and Puerto Rico over the past decade.

Investigators audited 7,122 total payments that Delaware made to MCOs between 2019 and 2021 on behalf of 409 enrollees who were already dead, according to a Social Security Administration database. It estimated that at least $4.2 million was paid to cover those dead enrollees over that period.

A subsequent review of 100 specific payments in that subset found that 53 of them were made to enrollees who were known at the time to be dead.

Auditors found that the biggest reason for so many errors is that between October 2020 and April 2023 the DMMA lost access to the database that the Social Security Administration uses to track deaths around the country “because it did not submit the documentation necessary to maintain access.”

In a response to the federal report, DMMA Director Andrew Wilson said that his office had “made several attempts to recertify the subscription during the pandemic.”

In the more than two years when the database was delinked, the state relied upon notices filed by other state branches, case workers observations, reports to the Office of Vital Statistics and alerts from law enforcement agencies and forensic offices to identify the deceased.

Another 44 payments in the audited set were to living eligible recipients, but erroneously linked to the deceased. Auditors blamed those errors on DMMA staff incorrectly entering Social Security numbers into their enrollment system and lacking quality assurance procedures to correct the errors.

“These errors could have led to the enrollee being mistakenly disenrolled, which would have caused a delay or denial of services,” investigators wrote.

Wilson said that the DMMA has developed new quality control measures to prevent those errors from repeating, including new training and leadership reviews. The division has also closed out all accounts connected to identified the deceased and begun a recoupment of the funds processed for them, he added.

A review of capitation records from 2022 and 2023, which were not included in the federal audit, will also commence to search for payments made on behalf of the deceased with an expected completion date of June 30.

The federal watchdog recommended that Delaware reimburse $3.4 million, or the federal share of the mismanaged payments, as a penalty. The state disagreed with that recommendation and said it would work with CMS to return recouped funds and repay any difference that cannot be recouped.

Read the entire report and the state’s response below.