US accuses health insurers, brokers of Medicare Advantage kickback scheme

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By Nate Raymond

BOSTON (Reuters) -The U.S. Department of Justice accused three of the nation’s largest health insurers of paying hundreds of millions of dollars in kickbacks to brokers in exchange for steering patients into the insurers’ Medicare Advantage plans.

In a complaint filed in Boston federal court on Thursday, DOJ alleged that CVS Health’s Aetna, Elevance Health and Humana engaged in a vast kickback scheme with insurance brokers eHealth, GoHealth and SelectQuote from 2016 to 2021.

The lawsuit alleges the companies violated the False Claims Act, which prohibits submitting a false claim to the government for payment. The Justice Department is seeking unspecified damages and penalties.    

CVS Health, Aetna’s parent company, and Humana in separate statements said they would defend themselves vigorously. GoHealth said the Justice Department’s case was “full of misrepresentations and inaccuracies.”

The other companies either had no immediate comment or did not respond to requests for comment.

Medicare Advantage plans are offered by private insurers who are paid a set rate by the U.S. government to manage healthcare for older people looking for extra benefits not covered in regular Medicare coverage.    

Many Medicare beneficiaries rely on insurance brokers to help them choose insurance plans that meet their needs and navigate the complexities of the Medicare Advantage program, the Justice Department said.

The Justice Department said that rather than acting in an unbiased manner and in the best interests of patients, the brokers directed Medicare beneficiaries to plans offered by insurers that paid them the most in kickbacks.

Those kickbacks were often disguised and referred to as “marketing,” “co-op,” or “sponsorship” payments, according to the complaint.

The lawsuit alleges the brokers incentivized their employees and agents to sell plans based on the kickbacks and at times refused to sell the Medicare Advantage plans of insurers who did not pay them enough.

The Justice Department said Aetna and Humana also threatened to withhold kickbacks to pressure the brokers to enroll into their plans fewer patients with disabilities, who the insurers viewed as less profitable.

In a statement, U.S. Attorney Leah Foley of Massachusetts called efforts to drive Medicare beneficiaries away because of their disabilities “unconscionable.”

Thursday’s case began as a whistleblower lawsuit filed in 2021 under the False Claims Act, which allows whistleblowers to sue companies to recover taxpayer funds paid out based on false claims.

Such cases are filed under seal initially while the Justice Department investigates the claims and decides whether to join the case, which it did this week.

(Reporting by Nate Raymond in Boston; Editing by Howard Goller)