Kickbacks in Medicare Advantage Emerge as Enforcement Priority for New Administration

Earlier this month, the Department of Justice formally intervened in a significant qui tam action against some of the largest health insurers in America—Aetna, Elevance (previously known as Anthem), and Humana. In a more than 200-page complaint, the Government alleges these insurance companies paid hundreds of millions of dollars in kickbacks to insurance brokers to steer patients into their Medicare Advantage plans. The brokers—companies eHealth, SelectQuote, and GoHealth—are also named defendants in the action (See DOJ press release here).

Medicare Advantage, sometimes referred to as Medicare Part C, was created by Congress in 1997 as an alternative option to traditional Medicare insurance. Under this option, an eligible beneficiary signs up for a Medicare Advantage plan offered by a private insurer. The government makes fixed payments to the insurer for each enrollee. As a result, the private insurer bears the risk if providing care for an enrollee proves to be unexpectedly expensive, but reaps the benefit if providing care ends up costing less than what the government has paid.

Why Medicare Advantage?

Medicare Advantage plans have been an increasingly popular option for enrollees.  Between 2007 and 2019, the percentage of all Medicare beneficiaries enrolled in a Medicare Advantage plan increased from 19% to 54%. The plans have also become increasingly important revenue sources for the plan sponsors, which has led to fierce competition for eligible enrollees.

According to the United States’ complaint, this financial competition between the Medicare Advantage plan sponsors is what ultimately led to the illegal kickbacks to patient brokers. Specifically, the government alleges that plan sponsors pushed the brokers to steer patients into plans that would result in higher paying plans, regardless of whether there were other, better-fitting or better quality plans available. The government also alleges that two of the plan sponsors—Aetna and Humana—pressured the brokers it worked with to enroll smaller numbers of disabled patients, based on the perception that it is harder to turn a profit covering such patients.

Closer Scrutiny on Medicare Advantage

While Medicare Advantage plans have generally been favored by the United States, based on their comparatively predictable costs for the taxpayer and increased choices available to beneficiaries, there has been increasing criticism of the program in recent years, and a slow but steadily increasing number of False Claims Act lawsuits. For example, in September of 2023, the United States reached a $37 million settlement with Cigna, based on allegations that Cigna submitted false and invalid diagnosis codes to the government in order to improperly inflate the Medicare Advantage payments it was receiving (See DOJ Press Release here).

In light of the government’s intervention in what could be a major False Claims Act action, it appears that holding Medicare Advantage Plan sponsors accountable remains a major enforcement priority for the new administration.

If you have information or questions regarding a potential case of health care fraud, FCA violations, or kickback schemes, schedule free and confidential consultation with our firm.