paying back medicaid

A friend who was on medicaid recently passed away and it was just discovered he had a 25,000 Life insurance policy. There was no other asets thus the assumption was there was nothing to probate. The $25,000 names a beneficiary. Does the money go to the beneficiary or does it go to Medicaid? (As I understand it he claimed less than $1,000 in assets at the time he was approved for Medicaid). If it goes to medicaid, what is the process to make this payment? Is there any liability of having this insurance at the time of him going onto medicaid. I don't believe there was any attempt on his part to defraud the Government since he was developmentally disabled and had no recollection of ever having a policy. Your comments are appreciated