HHS launches AI-backed health fraud crackdown

HHS launched AERO (Audit Evidence Review Operation), a new AI-powered initiative to detect and recover misspent federal healthcare funds by combing through more than five years of state and grantee audit data. The program, announced by HHS CFO Gustav Chiarello, uses machine learning to flag patterns of financial mismanagement that manual reviews would likely miss. Under AERO, HHS can withhold Medicaid dollars from states or recipients demonstrating chronic noncompliance. The initiative reflects a broader Trump administration push to leverage data analytics for fraud prevention across Medicaid, grants and federal health programs — and puts states on notice that algorithmic oversight has arrived in federal healthcare finance.

Sources: Healthcare Dive

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Hospitals sue CVS for allegedly siphoning $250M in 340B funds

Three major academic medical centers — Mount Sinai, University of Michigan Health and University of Kansas Health — have filed a federal lawsuit accusing CVS Health of covertly siphoning more than $250 million in 340B drug savings over five years. The plaintiffs allege CVS used a “secret pricing scheme” to artificially depress reimbursement rates for drugs dispensed under the federal 340B program, which is designed to help safety-net hospitals stretch resources for low-income patients. The lawsuit, filed in federal court, covers conduct from 2020 through 2025 and could set a significant precedent for how pharmacy benefit managers handle 340B contract pharmacy relationships.

Sources: Healthcare Dive

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Quorum Health transitions to nonprofit under Healthside Partners

Quorum Health, a private-equity-backed system operating 11 rural hospitals across nine states, has signed a definitive agreement to convert to nonprofit status through a deal with Healthside Partners. The transition would yield an estimated $13 million per year in tax savings while unlocking a planned $300 million capital investment in facilities and equipment. Quorum, which focuses on underserved and rural communities, expects the deal to close in fall 2026 pending regulatory approval. The move comes amid a broader trend of distressed rural health systems seeking nonprofit paths as a route to long-term financial stability and expanded access to philanthropic and government funding.

Sources: Healthcare Dive

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Innovaccer acquires CaduceusHealth with an eye toward autonomous RCM

Healthcare AI company Innovaccer has acquired billing services firm CaduceusHealth for a reported $66 million, adding its denial-resolution capabilities to Innovaccer’s agentic revenue cycle management platform, Flow. CaduceusHealth handles billing, claims and denial resolution for more than 4,000 medical practices, managing $5 billion in gross patient charges annually across major EHR systems. The deal positions Innovaccer to offer providers a fully automated end-to-end RCM solution built on its Gravity AI platform. The acquisition follows a restructuring that included 340 layoffs, which the company framed as part of an AI-first internal transformation applying its automation principles to its own operations.

Sources: Healthcare IT News

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CHOC CHIO: AI cuts complex chart reviews from an hour to minutes

At Children’s Hospital of Orange County (CHOC), Chief Health Information Officer Dr. Steven Martel says generative and agentic AI tools have already cut complex chart reviews from over an hour down to minutes — a practical gain he believes can ease the chronic burnout plaguing healthcare clinicians. Speaking about AI strategy for 2026, Martel stressed that success depends less on turning on the technology and more on rebuilding organizational data infrastructure from the ground up. He cautioned against autonomous clinical decision-making, advocating for human-in-the-loop governance, and warned health system leaders to rigorously assess whether AI models are actually trained on populations that match their own patient mix.

Sources: Healthcare IT News

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