HHS-OIG's recently released Fall 2024 Semiannual Report to Congress highlights an aggressive enforcement landscape and increased scrutiny for recipients of HHS funds, whether those funds are received through grants, contracts, or participation in federal healthcare programs.
HHS-OIG—that's the U.S. Department of Health and Human Services Office of Inspector General—is tasked with oversight of HHS programs, including through the identification and reduction of improper payments, misuse of funds, false claims, and fraud. Twice per year, HHS-OIG is required to report to Congress a summary of its enforcement and other activities from the past six months. The most recent report compiles OIG's activity during the April to September 2024 period, cataloging—among other items—the Office's audits and evaluations, investigative actions, and Anti-Kickback Statute safe harbor proposals.
With over $7 billion in expected recoveries and receivables, 1,548 distinct enforcement actions, and the exclusion of 3,234 individuals and entities from federal health care programs, HHS-OIG's activity during the second half of the 2024 fiscal year underscores the government's broad scope of oversight—targeting alleged fraud, waste, and abuse in Medicare, Medicaid, and grant programs. The report also highlights a marked increase—more than double the amount—from the previous year's expected recoveries. The Fall 2023 Semiannual Report to Congress identified $3.16 billion in expected recoveries, 1,553 enforcement actions, and the exclusion of 2,112 individuals.
From April 1, 2024 through September 30, 2024—alone—the report identifies over $4 billion in expected recoveries and receivables resulting from HHS-OIG investigations and audits, evidencing that HHS-OIG had an active six-month period in investigating misuse, falsity, and fraud.
Activity Impacting Federal Grantees
While much of HHS-OIG's reported activity impacted healthcare providers, for federal grantees, HHS-OIG's reported activity reflected the government's continued focus on headline-grabbing topics, including pandemic relief funding and opioid response efforts, as well as its more workaday pursuit of misspent and misused funds via audits and evaluations.
Notable activity identified in the report includes:
- Pandemic Relief Funding: HHS-OIG reviewed
COVID-19 relief fund spending across the country.
- HHS's Pandemic Response Accountability Committee (PRAC) worked with OIG to take an in-depth look at how six communities—Springfield, Massachusetts; Couer D'Alene, Idaho; Sheridan County, Nebraska; Marion County, Georgia; the White Earth Nation Reservation in Minnesota; and the Jicarilla Apache Nation Reservation in New Mexico—used pandemic funding to address a wide range of needs. The reviews revealed both successes and challenges in compliance and fund utilization, and emphasized the need for clear reporting and adherence to federal requirements.
- OIG identified potential mismanagement in COVID-19 funding appropriated to the Centers for Disease Control and Prevention (CDC) for its Epidemiology and Laboratory Capacity (ELC) program to provide support for pandemic response activities. OIG found, for example, that Public Health Foundation Enterprises, doing business as Heluna Health, claimed over $3.6 million in unallowable costs for which it used COVID-19-related grant funding. The costs were unallowable due to insufficient documentation supporting allowability.
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- OIG's pandemic enforcement activity included criminal consequences as well. Pharmacy owners who submitted millions in false claims to Medicare were sentenced to prison terms and ordered to pay more than $18M in restitution for their use of COVID-19 related emergency override billing codes to submit claims for cancer medications that were not prescribed or dispensed. Proceeds from the scheme were funneled through shell companies in China to individuals in Uzbekistan.
- Opioid Response Grants: As part of OIG's
oversight of States' efforts to combat the opioid crisis, OIG
audited Opioid Treatment Program (OTP) services provided to
Medicaid enrollees in various states.
- OIG concluded that West Virginia failed to adequately monitor its Opioid State Targeted Response and State Opioid Response grants, including subrecipient spending and program outcomes. These gaps jeopardized program goals.
- OTPs in Washington and Massachusetts did not fully comply with federal and state requirements for providing and documenting opioid treatment services, which may have put Medicaid enrollees at risk for poor treatment outcomes.
- Hundreds of counties in need of medication to treat opioid use disorder lacked office-based buprenorphine providers and opioid treatment programs. Even in counties where eligible providers did practice, they often did not treat any Medicare or Medicaid enrollees.
- Exclusion and criminal penalties were enforced against both providers and manufacturers related to opioid dispensing and distribution.
- Audits and Evaluations: the report also
highlights a healthy amount of HHS-OIG's bread and butter audit
and enforcement activity, for example:
- Gallup Indian Medical Center—an IHS-Operated Health Facility—did not timely conduct required background checks of staff and supervise certain staff.
- New York Medical College—a recipient of National Institutes of Health (NIH) funding—claimed unallowable grant costs and did not meet certain financial conflict of interest (FCOI) requirements. Costs were found to be unallowable because the College's system and procedures for accounting for personal services costs did not produce records that reasonably reflected the actual activity for which employees were compensated. As to FCOI issues, the College could not verify that 7 of 14 key individuals assigned to NIH awards completed required FCOI training and that 9 of the 14 key individuals completed required FCOI disclosure forms.
HHS-OIG's reported activity and findings demonstrate the critical importance of compliance with both general and program-specific federal grant requirements, ranging from ensuring documentation supporting allowability of costs, to accurate reporting, to monitoring subrecipients.
Risk Mitigation
HHS-OIG's report highlights that federal grant recipients operate under heightened scrutiny. Compliance, transparency, and proactive risk management are essential to avoid penalties and protect organizational integrity.
To mitigate risks, federal grantees should:
- Implement Rigorous Compliance Programs: Regularly audit practices to ensure adherence to state and federal requirements.
- Strengthen Subrecipient Monitoring: Grant recipients must ensure robust oversight of subrecipients to prevent misuse of funds.
- Maintain Comprehensive Documentation: Accurate and complete records—made contemporaneously and kept in good order—are critical in defending against audits or investigations.
On the Horizon
Finally, as recipients of federal funds—of all types—are no doubt aware, the government's enforcement priorities and focus can, and do, shift with changes in Washington. With a new administration to be sworn in next month, bringing new cabinet-level leadership and other potential changes to the federal workforce, it remains to be seen where HHS-OIG's focus will be in 2025. We'll keep an eye on developments and reporting as it happens.
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