The Department of Justice (DOJ) has sued three of the largest Medicare Advantage insurers and three dominant insurance brokerages, alleging a scheme in which the health insurers bribed the brokers to steer disabled adults into their policies.

The lawsuit targets CVS Health’s Aetna, Elevance Health’s Anthem, and Humana, which together cover nearly 40% of the Medicare Advantage market. And the brokers named in the lawsuit are eHealth, GoHealth, and SelectQuote.

The complaint said the alleged transactions occurred from 2016 through at least 2021. Federal prosecutors are joining previously-sealed litigation filed by a whistleblower who is a former eHealth employee.

The lawsuit was filed in Massachusetts, and the complaint accuses the defendants of violating the False Claims Act (FCA), which allows the government to sue individuals and companies it believes have defrauded it. Prosecutors said that the insurers paid hundreds of millions of dollars to get the brokers to steer customers into the insurers’ Medicare Advantage plans. 

And they contend that Aetna and Humana also used payments to pressure brokers to enroll fewer Medicare beneficiaries with disabilities – people the insurers perceived as more expensive to cover, and thus less profitable, according to the complaint.

In another instance, a broker emailed that Aetna was “jazzed” that the broker had reduced the portion of disabled people it channeled to the company from 25% to 15%.

Prosecutors allege that instead of offering impartial advice to their clients, the firms instead steered them toward the insurers who paid the brokers the most money, “regardless of the quality or suitability of the insurers’ plans.” At one point, a broker executive wrote about Aetna, “more money will help drive more sales [be]cause your product is dog shit,” the DOJ’s complaint alleges.

In another instance, a broker emailed that Aetna was “jazzed” that the broker had reduced the portion of disabled people it channeled to the company from 25% to 15%, the DOJ alleges.

In its press release, Deputy Assistant Attorney General Michael Granston said: “We are committed to rooting out illegal practices by Medicare Advantage insurers and insurance brokers that undermine the interests of federal healthcare programs and the patients they serve.”

The lawsuit was originally filed under the qui tam or whistleblower provisions of the FCA.

Insurers and brokers react

CVS Health and Humana both said they disagree with the allegations and plan to defend themselves vigorously, according to the WSJ.

“We intend to vigorously defend against these allegations, and we will not allow this litigation to distract from our mission to provide peace of mind to the Medicare beneficiaries that we serve,” the company said.

EHealth said it believes the complaint’s “claims are meritless.” Elevance Health said it was confident its plans have complied, and continue to comply with federal rules around broker payments, and it will fight the allegations.

SelectQuote said the claims in the suit are baseless, and it plans to defend itself vigorously. GoHealth told Axios it was disappointed in the government’s decision to intervene several years after an initial whistleblower complaint was filed.

Medicare Advantage

Medicare Advantage plans are typically required to accept any eligible senior in their service area who wishes to enroll, regardless of preexisting conditions. The Medicare Advantage program allows Medicare beneficiaries to enroll in private insurance companies’ Medicare Advantage plans. Beneficiaries often rely on insurance brokers to help them select the plan that’s best for them.

Medicare Advantage insurers now cover more than half of all Medicare enrollees.

To participate in Medicare Advantage, an individual must specifically opt to receive Medicare coverage through a Medicare Advantage plan. Once this choice is made, the individual must generally receive all of his or her care through the Advantage plan’s providers in order to receive Medicare coverage.

The Congressional Budget Office reported earlier this year that the Medicare Advantage share will grow from 54% of eligible Medicare beneficiaries in 2024 to about 64% in 10 years if it continues on its current course.

Gilead case

The US Attorney’s Office for the Southern District of New York (SDNY) recently announced that biopharmaceutical company Gilead will pay nearly $177m to the federal government (plus about $25m to several states) to settle claims that it paid millions to doctors in the form of speaking fees, dinners and other perks as a reward for being high prescribers of its HIV drugs or to encourage them to prescribe those drugs. 

As a result of its misconduct, prosecutors argued, federal healthcare programs paid millions of dollars in reimbursements for “tainted prescriptions.”

The lawsuit and settlement was a qui tam whistleblower action that had been filed under seal pursuant to the FCA.