OIG identifies $17 billion in potential cost savings

The Office of Inspector General (OIG) released an impact brief to highlight several congressional actions that, if taken, could lead to $17 billion in potential cost savings across HHS programs.

The OIG identified $6.9 billion in potential cost savings linked to risk adjustment improvements in Medicare Advantage (MA). In a 2024 report, the agency determined that MA plans’ questionable use of health risk assessments (HRA), in-home HRAs, and HRA-linked chart reviews led to inflated risk-adjustment payments. A previous OIG audit also revealed certain data integrity, payment integrity, and quality-of-care concerns tied to MA risk adjustment payments.

HHS could generate up to $4.9 billion in savings by ensuring proper billing of inpatient hospital stays, according to the brief. In 2021, the OIG released findings that showed a trend toward more expensive inpatient hospital stays that had emerged prior to the COVID-19 pandemic. Stays at the highest severity level are vulnerable to upcoding and other inappropriate billing practices.

The OIG identified $2.9 billion in potential cost savings related to improved oversight of hospital billing under the two-midnight rule. Although the OIG has discovered several long-term vulnerabilities through previous audit work on the implementation and oversight of the rule, CMS has yet to implement any of its recommendations.

HHS could save up to $1.3 billion by paying provider-based facilities at the Medicare freestanding, non-facility rate, according to the brief. In a 2022 report, the OIG identified significant cost savings that could be realized if evaluation and management services in certain states had been paid at the freestanding, non-facility physician fee schedule rate.

The OIG also highlighted $1 billion in potential cost savings tied to congressional action to prevent duplicate Medicaid managed care enrollment.

Revenue integrity professionals should review the reports featured in the brief to learn more about the OIG’s specific recommendations.

Editor’s note: Find more NAHRI coverage of OIG audits and reports here.