A recent blockbuster lawsuit filed by the federal Department of Justice has sent shockwaves through the insurance industry. The lawsuit alleges that insurers Aetna, Elevance Health (formerly Anthem), and Humana engaged in a scheme to pay “hundreds of millions of dollars in kickbacks” to large insurance brokerages eHealth, GoHealth, and SelectQuote. These payments, which spanned from 2016 to at least 2021, were purportedly made to incentivize these brokerages to steer patients towards the insurers’ Medicare Advantage plans while discouraging enrollment of potentially more costly disabled beneficiaries.
All parties named in the lawsuit have vehemently denied the allegations and have vowed to vigorously defend themselves in court. However, policy experts believe that this lawsuit will reignite concerns about whether Medicare enrollees are being guided towards the most suitable coverage for them or if they are being influenced by financial incentives for brokers.
In a separate development, The Wall Street Journal recently reported that UnitedHealth Group, another major insurer, is under investigation by the Justice Department for potential Medicare violations. UnitedHealth has refuted these claims, calling the article “deeply irresponsible” and stating that they have not been officially notified of any investigation by the DOJ.
Despite the outcome of these investigations, Medicare Advantage, the private sector alternative to original Medicare, is likely to face continued scrutiny due to its popularity among enrollees. While these plans offer additional benefits not covered by traditional Medicare, they also come at a higher cost to taxpayers and have been criticized for requiring prior authorization for certain services.
The DOJ lawsuit alleges that insurers circumvented commission caps by making large payments to brokerages under the guise of “marketing” or “sponsorship” fees. These payments, which exceeded $200 per enrollee in some cases, provided brokers with additional incentives to steer beneficiaries towards specific plans, regardless of their quality or suitability.
The lawsuit is also linked to a whistleblower lawsuit brought by a former eHealth employee, Andrew Shea, who raised concerns about the practices within the industry. The whistleblower’s attorney, Gregg Shapiro, expressed gratitude that the DOJ has intervened in the case, emphasizing the importance of ensuring that insurance recommendations are based on the individual needs and preferences of Medicare beneficiaries.
While the filing of this lawsuit is a positive step, experts believe that more action is needed from Congress and insurers to address the underlying issues. Brian Connell, a vice president at the Leukemia & Lymphoma Society, emphasized the need for reform to address the problematic incentives highlighted in the lawsuit.
In conclusion, the recent developments in the Medicare Advantage sector have raised important questions about the integrity of the system and the need for greater oversight and accountability. As the investigations unfold, it is clear that reforms are necessary to ensure that Medicare beneficiaries are receiving unbiased and tailored recommendations for their healthcare coverage.
