Legal Battle Erupts Over Medicare Advantage Enrollment Practices
The U.S. Department of Justice has filed a sweeping lawsuit against three major health insurance companies and three broker organizations, alleging a widespread scheme involving illegal kickbacks and discriminatory practices in Medicare Advantage (MA) enrollment. The complaint, filed in Boston federal court under the False Claims Act, names Aetna Inc. and affiliates, Elevance Health Inc. (formerly known as Anthem), and Humana Inc., along with broker organizations eHealth Inc., GoHealth Inc., and SelectQuote Inc.
The Kickback Allegations Explained
According to the DOJ, from 2016 through at least 2021, these insurers paid “hundreds of millions of dollars” in illegal kickbacks to the brokers in exchange for enrolling beneficiaries into their Medicare Advantage plans. The lawsuit alleges that instead of acting as unbiased advisors, the brokers directed seniors toward plans that offered the highest kickbacks, regardless of whether those plans best suited the beneficiaries’ needs.
The complaint details how the brokers allegedly created dedicated teams of insurance agents who could sell only plans from insurers paying high kickbacks, and sometimes refused to sell MA plans from insurers who didn’t pay sufficient kickbacks. This practice undermined the integrity of the Medicare Advantage selection process, which millions of seniors rely on to make critical healthcare decisions.
Discrimination Against Disabled Beneficiaries
Perhaps most concerning among the allegations is the claim that Aetna and Humana conspired with brokers to discriminate against Medicare beneficiaries with disabilities. According to the complaint, Aetna and Humana threatened to withhold kickbacks to pressure brokers to enroll fewer disabled Medicare beneficiaries in their plans, as these beneficiaries were perceived to be less profitable.
In response to these financial incentives, the DOJ alleges that the defendant brokers or their agents rejected referrals of disabled beneficiaries and strategically directed them away from Aetna and Humana plans. This practice directly contradicts the legal requirement that Medicare Advantage plans must accept any eligible beneficiary regardless of their health status or pre-existing conditions.
How The Alleged Scheme Operated
The lawsuit provides detailed insight into how these arrangements allegedly functioned in practice:
For Aetna, the complaint describes payments disguised as “marketing” fees that were actually designed to incentivize MA enrollment. The DOJ included an alleged quote from a broker executive who described Aetna’s product in crude terms while acknowledging that “more money will help drive more sales.”
Humana allegedly paid tens of millions annually to each broker in disguised marketing fees, creating dedicated groups of agents who exclusively sold Humana plans and prioritized the insurer in broker call-routing systems. In return, brokers were expected to meet specific enrollment targets and shift market share toward Humana.
Elevance Health (formerly Anthem) is accused of paying illegal kickbacks primarily to GoHealth and eHealth. Unlike the other insurers, Elevance’s strategy allegedly centered on avoiding explicit language in contracts while internally acknowledging that payments were in exchange for sales.
Origin of the Case: Whistleblower Complaint
The lawsuit originated from a whistleblower complaint initiated in 2021 by a former employee of eHealth. Under the False Claims Act’s qui tam provisions, individuals with knowledge of fraud against the government can file lawsuits on behalf of the United States and potentially receive a portion of any recovered funds.
The case was filed under seal initially while the Justice Department investigated the claims and decided whether to join, which it did this week. This approach demonstrates the government’s increasing focus on combating healthcare fraud, particularly in the rapidly growing Medicare Advantage program.
Responses from the Companies
All companies named in the lawsuit have issued statements denying the allegations:
CVS Health (Aetna’s parent company), Elevance, and Humana dispute the allegations and plan to defend themselves “vigorously,” according to their separate statements.
A GoHealth spokesperson stated: “We are disappointed with their decision to intervene and disagree with their accusations, which are full of misrepresentations and inaccuracies. GoHealth has always operated in a manner that is compliant with all rules and regulations.”
SelectQuote responded: “We strongly disagree with the allegations in this suit and plan to defend ourselves vigorously. SelectQuote has been in business for over 40 years and has helped millions of Americans find the right coverage for their needs.”
eHealth stated: “Since being notified of the government’s investigation in January 2022, eHealth has fully cooperated with the Department of Justice to demonstrate that we conduct our business affairs consistent with federal regulations. eHealth strongly believes the claims are meritless.”
Broader Implications for Medicare Advantage
This high-profile lawsuit comes at a time when Medicare Advantage has been growing rapidly, now covering approximately 50% of all Medicare beneficiaries. The program allows private insurance companies to offer Medicare plans, often with additional benefits beyond traditional Medicare.
The allegations raise serious questions about the integrity of the enrollment process and whether beneficiaries are truly receiving unbiased guidance when selecting plans. If proven, these practices would have resulted in beneficiaries being directed to plans that may not have been the best fit for their healthcare needs, while potentially discriminating against those with disabilities.
What’s Next in the Legal Process
The Justice Department’s Civil Division, Commercial Litigation Branch, Fraud Section and the U.S. Attorney’s Office for the District of Massachusetts are handling the matter, with assistance from the Department of Health and Human Services (HHS) Office of Inspector General and the FBI.
As this case moves through the legal system, it will likely prompt increased scrutiny of broker-insurer relationships across the healthcare industry. The outcome could have significant implications for how Medicare Advantage plans are marketed and sold, potentially leading to regulatory changes designed to ensure more transparent and beneficiary-focused enrollment practices.
The Justice Department is seeking unspecified damages and penalties under the False Claims Act, which allows for triple damages plus additional civil penalties for each false claim submitted to the government.
Resources for Medicare Beneficiaries
For Medicare beneficiaries concerned about their plan selection, resources are available to help navigate options without relying solely on insurance brokers:
- Medicare.gov offers comparison tools for evaluating different plans
- State Health Insurance Assistance Programs (SHIPs) provide free, unbiased counseling
- The Medicare Rights Center (1-800-333-4114) offers a helpline for personalized assistance
In light of these allegations, Medicare beneficiaries may want to research plans more thoroughly and seek multiple sources of information before making enrollment decisions.
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