DOJ Alleges Medicare Advantage Insurers Offered ‘Kickbacks’ for Prime Patient Access

A significant lawsuit has emerged, filed by the U.S. Department of Justice on May 1, alleging that major insurers Aetna, Elevance Health (formerly Anthem), and Humana engaged in a scheme involving “hundreds of millions of dollars in kickbacks” to large insurance brokerages like eHealth, GoHealth, and SelectQuote. This misconduct is said to have occurred between 2016 and 2021, aiming to funnel Medicare beneficiaries toward specific Medicare Advantage plans while steering clear of potentially more costly disabled individuals.

Many Medicare enrollees, about a third, seek guidance when deciding between original Medicare and private-sector alternatives. Policy experts warn that the lawsuit may shed light on pressing issues regarding the nature of the advice being provided—whether it prioritizes beneficiaries’ best interests or brokers’ financial gain.

Medicare Advantage currently serves over half of the enrollees in the federal health program. These private plans often offer additional benefits that original Medicare does not cover, such as vision and fitness memberships. However, they have attracted scrutiny for potentially costing taxpayers more per enrollee compared to traditional Medicare. Furthermore, they require patients to obtain prior authorization for certain medical services, a practice that is uncommon in original Medicare.

The DOJ’s lawsuit claims that the insurers disguised kickbacks as “marketing” fees to circumvent regulations limiting broker commissions. The incentives reportedly exceeded $200 per enrollee, which encouraged brokers to promote insurance plans regardless of their quality or suitability. This follows a whistleblower suit initiated by a former eHealth employee.

In one instance detailed in the lawsuit, Anthem allegedly provided more than $230 million to broker GoHealth between 2017 and 2021 in exchange for achieving specific sales targets. Insurers and brokers have contested these allegations, asserting their intention to defend against them in court. eHealth firmly maintains that the claims are without merit.

The case is anticipated to accentuate the ongoing debate about the role of private insurers in Medicare, revealing troubling internal correspondences among insurance and brokerage personnel. Some communications suggest that the insurers viewed these kickbacks as an expedient method to escalate sales rather than focusing on quality service.

Notably, consumers may face various challenges due to these financial motivations. The lawsuit highlights cases where individuals were switched into plans without explicit consent, leading to substantial unexpected costs. One instance recounted involved a cancer patient who found themselves with $17,000 in treatment costs after transitioning from original Medicare to a managed-care plan.

The allegations extend to practices that disproportionately affect beneficiaries with disabilities, who reportedly had their inquiries disregarded or diverted. This discrimination runs counter to regulations that prohibit insurers from excluding these individuals from coverage.

Despite these concerns, brokers continue to receive commissions, albeit within regulated limits. As congressional discussions regarding Medicare reform evolve, experts assert that the financial incentives outlined in the lawsuit necessitate legislative scrutiny.

David Lipschutz, co-director at the Center for Medicare Advocacy, emphasized that while brokers can provide valuable assistance, beneficiaries are encouraged to explore options like the federally funded State Health Insurance Assistance Program, which operates independently of any financial incentives.

As Congress engages in budgetary debates, the urgency of reforming Medicare Advantage is underlined by the lawsuit’s revelations. Whether bipartisan support for meaningful changes will emerge remains an open question. The substantial sums implicated in the lawsuit could catalyze legislative action focused on reducing wasteful expenditures that detract from patient care.