The Trump administration's Office of Personnel Management is directing health insurance carriers in the federal employee program to tighten fraud controls and submit to pharmacy benefit manager audits, targeting up to $1 billion in annual taxpayer losses.
The Trump administration's Office of Personnel Management moved Wednesday to put health insurance carriers and pharmacy benefit managers on notice, issuing new compliance requirements aimed at stamping out fraud in the Federal Employees Health Benefits program, the largest employer-sponsored health plan in the country. The directive, coordinated with the White House Task Force to Eliminate Fraud, marks the administration's most direct intervention yet into a $70 billion program that federal watchdogs say has long been under-policed.
The FEHB program covered roughly 8.2 million federal employees, family members, and other eligible individuals in fiscal year 2024 at a cost of about $70 billion to the government and enrollees combined, according to OPM data. OPM estimates fraudulent or improper enrollments drain up to $1 billion from the program each year, primarily through ineligible family members remaining on coverage they no longer qualify for and the claims that follow.
The new requirements direct carriers to strengthen fraud prevention protocols, improve payment reviews, tighten pharmacy benefit oversight, and hold subcontractors to stricter accountability standards, according to Fox News, which first reported the action. Carriers will also face expanded audit and reporting obligations.
The pharmacy benefit manager piece of the directive carries particular weight. PBMs sit between drugmakers, pharmacies, and health plans, negotiating rebates and setting reimbursement rates. The three largest, owned by CVS Health, UnitedHealth, and Cigna, control nearly 80 percent of insured drug transactions, according to industry data, and critics across party lines have long accused them of keeping savings that should flow to health plans and patients.
The OPM's own inspector general documented the problem in stark terms. An audit released earlier this year found that CVS Caremark, the PBM arm of CVS Health, overcharged the Blue Cross Blue Shield Federal Employee Program by more than $615 million on transactions from 2018 through 2021, according to the OIG report. The inspector general found CVS failed to pass through $480 million in discounts it negotiated with two large retail pharmacy chains and withheld another $109 million in fees collected from pharmacies. The inspector general recommended OPM demand roughly $600 million in repayment. CVS called the findings "a retroactive contract dispute," in a statement from spokeswoman Shelly Bendit. That case was not isolated. A 2024 OPM inspector general audit found Express Scripts International overcharged the American Postal Workers Union Health Plan nearly $45 million under similar pricing arrangements, according to the OIG.
Building an Audit Infrastructure
OPM is not stopping at compliance letters. The agency is building a dedicated data science and audit team in coordination with its inspector general to review anonymized claims data and flag overbilling and fraud patterns before they compound, Fox News reported. The effort signals a deliberate shift from reactive enforcement toward systematic financial oversight of a program that has historically relied on carriers to monitor themselves.
Federal watchdogs have called for exactly that kind of structural change. The Government Accountability Office said in a 2025 report that OPM should do more to manage fraud risks across the FEHB program, identifying specific vulnerabilities including benefit card sharing, improper inducements, insufficient documentation, kickbacks, and ineligible providers billing the program. A separate GAO report published in April 2026 found OPM's process for verifying provider eligibility was not consistently working, with data analyses turning up claims from providers who were deceased or had been excluded from other federal programs for prior violations.
The administration's push lands against a backdrop of growing federal pressure on PBMs broadly. The Federal Trade Commission has moved against major PBMs over pricing practices, and Congress tightened PBM transparency requirements in the Consolidated Appropriations Act of 2026, according to Modern Healthcare reporting. OPM's new directive adds compliance pressure from the program side, not just the regulatory one.
Compliance deadlines for carriers and a timeline for the new audit team to become operational have not been made public, and OPM has not specified what financial penalties, if any, non-compliant carriers will face. For the 8.2 million federal workers and families whose coverage runs through the FEHB and Postal Service Health Benefits programs, how aggressively OPM follows through will determine whether this directive produces lasting savings or joins the long list of federal reform promises that faded once the press release cleared.
Also read: Russia Hacked Rep. Don Bacon's Signal Account, FBI Is Investigating • NASA Chief Defends All-Male Artemis III Crew as Merit-Based Selection • Trump nominates CFPB veteran Brian Johnson to permanently lead the bureau
