Profit over patients? Medicare insurers accused of bribing brokers

A blockbuster lawsuit from the federal Department of Justice alleges that insurers Aetna, Elevance Health (formerly Anthem), and Humana paid “hundreds of millions of dollars in kickbacks” to large insurance brokerages eHealth, GoHealth, and SelectQuote. The payments, made from 2016 to at least 2021, were incentives to steer patients into the insurer’s Medicare Advantage plans, the lawsuit alleges, while discouraging enrollment of potentially more costly disabled beneficiaries.

All the insurers and brokers named in the case have denied the allegations and say they will fight them in court.

Policy experts say the lawsuit, filed May 1, will add fuel to long-running concerns about whether Medicare enrollees are being encouraged to select the coverage that is best for them — or the one that makes the most money for the broker.

In other Medicare news, The Wall Street Journal last week, citing unnamed sources, reported that a separate insurer, UnitedHealth Group, was being investigated by the Justice Department regarding unspecified potential Medicare violations. UnitedHealth pushed back, calling the article “deeply irresponsible” and saying it had not been notified by the DOJ as to any such investigation.

Regardless of how this attention shakes out, Medicare Advantage, the private sector alternative to original Medicare, is likely to continue to draw scrutiny because it covers more than half of those enrolled. But the plans, which often include benefits not covered by the traditional government program, cost taxpayers more per enrollee and have drawn criticism for requiring patients to get prior authorization for certain services, something rarely required in original Medicare.

The DOJ lawsuit alleges insurers made large payments they called “marketing” or “sponsorship” fees to get around rules that set caps on broker commissions. The payments, according to the lawsuit, added incentives — often more than $200 per enrollee — for brokers to direct Medicare beneficiaries toward their coverage “regardless of the quality or suitability of the insurers’ plans.”

The case joins the DOJ in a previously filed whistleblower lawsuit brought by a then-employee of eHealth, Andrew Shea. The whistleblower’s attorney, Gregg Shapiro, said his client is grateful the DOJ chose to intervene: “People with Medicare must know that when an insurance agent recommends a plan, that recommendation is based solely on the client’s individual needs and preferences,” Shapiro said in an emailed statement.

While encouraged that the Trump administration filed the case under investigations initiated by the Biden administration, policy experts say Congress and insurers need to do more.

“What we see in this lawsuit highlights the terrible incentives that desperately need Congress to reform,” said Brian Connell, a vice president at the Leukemia & Lymphoma Society, an advocacy group.