Still Not Looking, Still Not Finding: OPM Fails Another Audit on Improper Payment Reporting
- Christin Deacon
- 7 days ago
- 4 min read
By Chris Deacon
When it comes to safeguarding taxpayer dollars, the federal government has a law on the books meant to ensure programs track what’s being paid and to whom. But what happens when the agency responsible for one of the largest health plans in the country simply refuses to look?
According to the 2025 audit report from the Office of Personnel Management’s Office of Inspector General, that’s exactly what’s happening—again. For the second year in a row, OPM has failed to comply with the Payment Integrity Information Act of 2019 (PIIA), and in the most critical area: the Federal Employees Health Benefits Program (FEHBP), which insures more than 8 million federal workers, retirees, and their families and spends over $120 billion annually.
And this year’s defense? If we don’t estimate how much we’ve overpaid, the rest of the law doesn’t apply.
What PIIA Requires—and What OPM Didn't Do
PIIA was passed to bring order, transparency, and accountability to federal spending. Any program with over $10 million in annual outlays must regularly assess its risk of making improper payments—which include anything paid in error, without documentation, or to the wrong party—and report estimates when that risk is deemed significant.
That’s exactly where FEHBP stands. In 2022, the program was officially placed in Phase 2, a designation under Office of Management and Budget (OMB) guidance that triggers a series of mandatory steps: estimate improper and unknown payments, publish a corrective action plan, and demonstrate improvement year-over-year.
But OPM’s Health and Insurance division didn’t publish an estimate in FY 2024. Or FY 2023. And based on that omission, they now argue they aren't required to comply with the rest of PIIA's obligations.
“Since none of those preconditions have occurred, OPM cannot be non-compliant with requirements that have not yet arisen.” — OPM response to OIG Audit Report No. 2025-IAG-003
That circular logic didn’t sit well with the Inspector General, who reiterated—again—that PIIA’s requirements do apply.
“Since Healthcare and Insurance did not report an improper payment estimate… Healthcare and Insurance is non-compliant with these three requirements.” — OPM OIG, 2025 PIIA Compliance Audit
Simply put: OPM is sidestepping the law by refusing to report the very data that would trigger accountability.
Meanwhile, the Overpayments Keep Coming
This isn’t about theoretical risk. There is now concrete evidence of real overpayments in the FEHBP system—evidence that OPM continues to ignore in its annual reporting.
Take the most recentApril 2025 audit of Blue Cross Blue Shield of South Carolina, one of FEHBP’s major carriers. That report revealed that claims were being paid at full billed charges when the pricing system failed to return a value—without the required management review. Even more troubling: when the Plan was confronted, they didn’t fix the oversight—they deleted the review policy entirely.
“This policy update now fosters a greater risk of claims being erroneously reimbursed at billed charges, resulting in the increased likelihood of provider overpayments.” — OIG Report No. 2024-CAAG-011
The error rate on the sampled claims was 29%. If extrapolated over the 12.5 million claim lines at issue, can you imagine the impact?
And the list goes on.....
In a 2024 audit of Florida Blue the OIG identified $401,823 in questioned charges across 36 claims. These included overpayments due to incorrect pricing of unlisted procedure codes, duplicate claim payments, and improper handling of multiple procedure modifiers. One example from the Florida Blue audit includes $160,261 in overpayments across 13 claims. Despite being flagged, these errors were not properly recovered, and internal reviews failed to prevent them.
A 2023 OIG audit of Blue Cross Blue Shield of North Carolina found $203,817 in overpayments tied to unlisted procedure codes, $370,707 due to network misclassifications, $170,594 from Medicare coordination failures, and over $99,000 due to co-surgeon coding errors.
If OPM had been following PIIA as required, those findings—and others like them—would have fed into a broader estimate of improper payments for the program as a whole. Instead, they were boxed off, ignored in the agency’s public reporting, and excluded from the data that would have triggered full statutory compliance.
The Stakes of Looking Away
This isn’t just a paperwork issue. It’s a matter of governance.
When a federal agency oversees more than $120 billion in healthcare spending and chooses not to count known overpayments—despite formal audit findings—it undermines the very purpose of PIIA. And it sends a dangerous message: that oversight is optional if you're willing to game the reporting rules.
“Healthcare and Insurance continues to reaffirm that it is on track to publish an improper payment estimate in October 2025.” — 2025 PIIA Audit Report
That’s three years after FEHBP was designated high-risk, triggering higher scrutiny. Three years of missed reporting. Three years of audit findings with no accountability. And still no real commitment to change.
In its response, OPM cited its “numerous improvements to payment integrity,” including training, internal spreadsheets, and working groups.
I’ll keep pointing to it—even if no one listens.
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