Exclusive: HHS watchdog finds more than $16B in health savings

The Department of Health and Human Services' watchdog identified more than $16 billion in overpayments, fraudulent billings and possible cost savings in health programs over a half year spanning the Biden and Trump administrations, including more than $3.5 billion to be returned to the government. Why it matters: The semiannual summary, first shared publicly to Axios, comes as the Trump administration says it's prioritizing government efficiency and rooting out waste, fraud and abuse. It reflects growing concern over federal payments to Medicare Advantage plans, along with enforcement actions like McKinsey agreeing to pay $650 million to settle charges that its advice caused Purdue Pharma to submit fraudulent claims stemming from the opioid crisis.The report was sent to Congress late Friday. By the numbers: The HHS Office of Inspector General identified $16.6 billion in real and potential savings from October 2024 through March of this year.The office's investigations identified $3.5 billion in funds due back to the federal government, and its audits found another $451 million that the government will recoup. More than $12 billion in potential cost savings were identified if HHS makes recommended policy changes. The office issued 165 recommendations over the six months.In one example, OIG found that Medicare could have saved $7.7 billion if it lowered payments for swing beds at critical access hospitals so that they match skilled nursing facilities. The change would require action from Congress, and the Centers for Medicare and Medicaid Services said it didn't agree with the recommendation. Nearly 400 civil actions, including settlements, resulted from OIG's work during the period. OIG says its work returned $11 to the federal government for each $1 invested in its office."Whether it's us, whether it's [the Government Accountability Office], whether it's DOGE, whether it's state auditors, there's always a need for program integrity and oversight," said John Hagg, assistant inspector general in the IG's office of audit services.Zoom in: OIG over the six months covered in the report continued its investigations that raise concerns over improper payments in Medicare Advantage. OIG found that many patient diagnoses reported by privately run Medicare plans were supported only through health risk assessments. That allowed plans to be paid more to care for sicker, more expensive patients without enough supporting documentation, raising questions about their validity, per OIG. OIG recommended that Medicare further restrict plans' abilities to get higher payments based on diagnoses reported only on in-home health risk assessments in order to save an estimated $4.2 billion for Medicare. The office plans to do more work on Medicare Advantage in the near future, Melicia Seay, assistant inspector general in the office of evaluation and inspection, told Axios. "There's a lot of areas in terms of Medicare Advantage that we're exploring, whether it is the payment policy related to the program, the service delivery, quality of care," she said. Catch up quick: President Trump in January abruptly fired several agency inspectors general, including longtime HHS watchdog Christi Grimm. He claimed that "some were not doing their job."Grimm and seven other watchdogs have sued the administration to get their jobs back. The case has not yet been decided. Juliet Hodgkins, a career OIG employee, is currently acting inspector general. Trump has nominated Republican attorney Thomas March Bell to lead the office.

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