On Monday, a report from the Department of Health and Human Services (HHS) revealed over $16 billion in questionable payments, shedding light on persistent inefficiencies within federal health care spending.
This biannual report to Congress, which was submitted late Friday, uncovered billions tied to fraudulent claims and unrealized savings across various federal health initiatives—totaling more than $3.5 billion that could potentially be reclaimed, as reported by Axios.
The findings raise significant concerns about spending on Medicare Advantage plans. There’s a lot to unpick here, particularly considering the broader context of health expenses.
Additionally, the report noted a rise in enforcement actions, notably McKinsey & Company’s $650 million settlement regarding false claims related to opioid prescriptions that were fraudulently submitted.
From October 2024 to March 2025, the HHS Inspector’s Office detailed $16.61 billion in realized savings along with possible future savings. So, $3.5 billion has already been returned to federal coffers, but there’s an expectation to recover an extra $451 million, according to Axios.
Moreover, the report highlighted over $12 billion in potential savings if HHS implements substantial policy reforms. In fact, they issued 165 recommendations aimed at enhancing program oversight and improving operational efficiency.
On the topic of Medicare, the report indicated that $7.7 billion was saved by adjusting swing bed payments at Critical Access Hospitals to align with those of skilled nursing facilities (SNF). Yet, it’s important to note that this adjustment requires congressional approval, and the Centers for Medicare and Medicaid Services (CMS) have expressed disagreement with this change.
In a recent tweet, the HHS-OIG commended its achievements, stating their efforts could result in $11 returned for every dollar invested.
John Hagg, an aide at OIG, noted the continued necessity for program integrity and monitoring, regardless of which agency is overseeing it—be it federal or state-level auditors.
During the reporting period, OIG found ongoing issues with inappropriate payments concerning Medicare advantages. Many patient diagnoses from private Medicare plans were found to predominantly rely on health risk assessments. OIG suggested that this practice likely inflated payments for sicker patients without adequate documentation to back these diagnoses.
The recommendation was clear: Medicare should tighten regulations preventing plans from receiving increased payments based solely on home health risk assessments. This adjustment could potentially save the program around $4.2 billion.
This follows HHS’s announcement on May 25 that the CDC would be cutting billions in pandemic-related funding for state and local health sectors, nonprofits, and international partners. Several subsidies and cooperation agreements identified by agents were increasingly seen as unnecessary.
In a related development, on April 21, a senior HHS representative disclosed that the Trump administration had frozen over 500 grants, totaling about $1 billion, that were directed to Harvard University for various health initiatives.
Overall, HHS-OIG has pinpointed a $2.9 billion potential saving through improved oversight of hospital billing under certain CMS guidelines, highlighting ongoing cost-saving opportunities in the system.
The broader implications of these findings remain a topic of discussion, particularly regarding their impact on future health care policies and spending.
