Maryland’s main Medicaid office missed thousands of red flags, allowing millions of dollars in questionable payments to slip out the door for people who were dead, incarcerated, or otherwise ineligible, according to a new state audit. Weak data checks and clunky procedures left the Medical Care Programs Administration struggling to screen enrollments, clean up its books, and claw back suspect payments. State health officials say they are now combing through the claims and tightening oversight while they plan recoveries.
Audit scope and top findings
The Office of Legislative Audits carried out a fiscal compliance review of the Maryland Department of Health’s Medical Care Programs Administration covering April 1, 2022, through May 15, 2025, and concluded that MCPA’s accountability and compliance were still “unsatisfactory.” According to the Office of Legislative Audits, reviewers found that large numbers of denied and duplicate claims were left in the state’s data, which is used to set managed care capitation rates. Auditors reported that those and other repeat problems increased the risk that Maryland’s payments to Medicaid insurers were inflated.
Dead and jailed recipients among the red flags
The audit and the state’s own follow-ups uncovered payments tied to people who had already been reported dead and to people who were incarcerated. Maryland Health Secretary Meena Seshamani told WMAR-2 News that MCPA is reviewing about $2.8 million in potentially improper claims, roughly 18,086 claims connected to 4,510 individuals, for services billed after the state had recorded those recipients’ dates of death. In a sample of cases, auditors asked the agency to investigate, and MCPA found that 30 deceased recipients had claims totaling about $458,000. The department reported that it had recovered about $178,000 of that amount as of December 2025.
Key numbers that stood out
The financial exposure did not stop there. The BayNet reported that a data match identified about 2,452 incarcerated individuals who stayed enrolled in managed care, which resulted in an estimated $7.8 million in improper capitation payments. Auditors also flagged more than 124,000 duplicate or denied claims, roughly $287 million, that were not removed from the expenditure data used to set capitation rates. On top of that, they cited a backlog of supplemental newborn delivery payments totaling about $13.8 million that had not been fully reviewed or resolved.
State response and timeline
In a written response included with the audit, Seshamani said the department disagreed with parts of the auditors’ methodology but acknowledged that the administration did not address certain eligibility issues quickly enough. Speaking with WMAR-2 News, she said MCPA is analyzing the post-death claims and expects to finish its internal review by December 31, 2026, then pursue recovery of any payments it determines were improper. The department’s formal response in the report outlines corrective steps that range from expanded data matching and vendor audits to updated standard operating procedures, with staggered target dates for completion.
Why this matters for Marylanders
Auditors warned that unchecked errors can drive up the capitation rates Maryland pays insurers, which ultimately hits taxpayers and leaves a big hole in program integrity. Similar issues have cropped up across the country. A federal watchdog has documented hundreds of millions of dollars in improper Medicaid payments for deceased enrollees in other states, highlighting the stakes for agencies that fail to rigorously match eligibility files with death and incarceration data, according to PBS NewsHour. The audit also pointed to staffing shortages and past IT problems, including a 2021 ransomware incident, as factors that made it harder for MCPA to stay on top of suspicious activity.
What to watch next
Auditors said they will keep tracking MCPA’s progress and urged the department to complete its reviews and strengthen controls. The BayNet notes that the department has agreed to phased corrective actions over the next two years, and that oversight units plan to check whether those fixes actually happen. For taxpayers, providers, and advocates, key metrics to watch include the final total of recovered payments, the rollout of revised procedures for disenrollment and encounter data checks, and follow-up audits that show whether the reforms are sticking.
Legal and federal exposure
Beyond Maryland’s own repayment efforts, improper Medicaid spending can invite closer federal scrutiny and possible disallowances of the federal share of the money if the Centers for Medicare & Medicaid Services or other federal investigators decide claims were ineligible. National reviews by federal watchdogs have already found this kind of problem in several states, raising the pressure on Maryland to show that it is correcting course and recouping funds where required, according to PBS NewsHour.
