US Prosecutors Charge Major Insurance Firms with Paying Kickbacks for Private Medicare Plans

The Justice Department has charged three major health insurance companies with engaging in illegal kickback schemes totaling hundreds of millions of dollars over several years, involving payments to insurance brokers who guided individuals to private Medicare plans.

Federal prosecutors also alleged that two of these insurers colluded with brokers to discriminate against individuals with disabilities by hindering their enrollment in private Medicare plans, based on the belief that these plans would be costlier.

Around 12% of Medicare beneficiaries, who are disabled and under the age of 65, qualify for the federal insurance program. Their intricate health requirements often lead to high care costs.

According to a complaint initially filed by whistleblowers, the Department of Justice has joined the case against the nation’s largest health insurance company, previously known as Anthem. Humana is also implicated for allegedly funneling kickbacks to three large brokers—Ehealth, GoHealth, and SelectQuote—to boost enrollment in Medicare Advantage plans, which have also been tied to fraudulent activities.

A complaint filed in federal court in Boston claims that the kickback scheme spanned from at least 2016 to 2021, accusing Aetna and Humana of discrimination against individuals with disabilities.

Aetna, Elevance, GoHealth, and Humana have denied the allegations, although others have not responded to requests for comments.

This lawsuit is one of the first indications of the Trump administration’s scrutiny of certain Medicare Advantage plans, which face ongoing federal oversight. Critics, including lawmakers, have condemned these popular plans for potential overcharging the federal government through aggressive marketing strategies. Over half of all individuals enrolled in the federal program are covered by Medicare Advantage plans.

During the Senate confirmation hearing for Dr. Mehmet Oz, he assured concerned senators about the oversight of Medicare plans, promising a “new sheriff” to address excesses.

Brokers play a crucial role in assisting senior Americans in selecting private Medicare plans. However, the allegations suggest brokers have directed individuals to plans that offer the highest commissions instead of the best fit for their needs.

In recent years, small local brokerage firms have been overshadowed by large national organizations that employ numerous agents and utilize call centers and websites like those mentioned in the lawsuit. These companies increasingly depend on technology to help brokers identify the optimal plans for callers, facilitating the kind of steering described in the allegations.

The Biden administration implemented regulations last year aimed at reducing the commissions insurance companies can pay to brokers for patient enrollments. Recent Congressional testimonies and consumer complaints have indicated that insurers are offering bonuses to brokers for enrolling more individuals in specific plans, regardless of their actual needs. However, the lawsuit is still pending.

Regarding cases involving disabled individuals, federal prosecutors have stated: “The efforts to specifically exclude beneficiaries are even more ruthless given that their disabilities may render them less profitable for health insurance companies,” said attorney Leah B. Foy. “We will continue to investigate and prosecute the greed targeting these beneficiaries.”