When people call large insurance brokerages seeking free assistance in choosing Medicare Advantage plans, they’re often offered assurances such as this one from eHealth: “Your benefit advisors will find plans that match your needs — no matter the carrier.”
About a third of enrollees do seek help in making complex decisions about whether to enroll in original Medicare or select among private-sector alternatives, called Medicare Advantage.
Now a blockbuster lawsuit filed May 1 by 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 also discouraging enrollment of potentially more costly disabled beneficiaries.
Policy experts say the lawsuit 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.
Medicare Advantage plans, which may include benefits not covered by the original government program, such as vision care or fitness club memberships, already cover more than half of those enrolled in the federal health insurance program for seniors and people with disabilities. The private plans have strong support among Republican lawmakers, but some research shows they cost taxpayers more than traditional Medicare per enrollee.
The plans have also drawn attention for requiring patients to get prior authorization, a process that involves gaining approval for higher-cost care, such as elective surgeries, nursing home stays, or chemotherapy, something rarely required in original Medicare. Medicare Advantage plans are under the microscope for aggressive marketing and sales efforts, as outlined in a recent report from Sen. Ron Wyden (D-Ore.). During the last year of the Biden administration, regulators put in place a rule that reined in some broker payments, although parts of that rule are on hold pending a separate court case filed in Texas by regulation opponents.
The May DOJ case filed in the U.S. District Court for the District of Massachusetts alleges insurers labeled payments as “marketing” or “sponsorship” fees to get around rules that set caps on broker commissions. These payments from insurers, 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.
“In order to influence the market, the Defendant Insurers understood that they needed to make greater, illicit payments in addition to the permitted (but capped) commissions,” the lawsuit alleges.
In one example cited, the lawsuit says insurer Anthem paid broker GoHealth “more than $230 million in kickbacks” from 2017 to at least 2021 in exchange for the brokerage to hit specified sales targets in payments often referred to as “marketing development funds.”
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