Oak Street Health, a CVS Health subsidiary and primary care center network for Medicare beneficiaries, has agreed to pay $60 million to resolve allegations that it violated the False Claims Act by paying kickbacks to insurance agents in exchange for referring seniors to its clinics. Whistleblower Joseph Stinson will receive a $9.9 million whistleblower award for exposing the kickback scheme.
What is a Medicare Advantage Plan?
Medicare Advantage, also known as Medicare Part C, allows Medicare beneficiaries to receive their Medicare benefits through private insurance plans. These plans, called Medicare Advantage Plans, are paid a fixed monthly amount per enrolled beneficiary by the Centers for Medicare and Medicaid Services (CMS).
To ensure payments accurately reflect the expected cost of providing care to each beneficiary, CMS uses a risk adjustment process. This adjusts payments based on the health status of enrollees. In general, Medicare Advantage Plans receive higher payments for sicker enrollees.
The number of Medicare beneficiaries choosing Medicare Advantage over traditional Medicare has skyrocketed, now exceeding 50 percent. Medicare Advantage insurance companies and primary care physicians highly prize these beneficiaries because Medicare pays these plans a fixed amount per patient, regardless of actual care costs. Insurance companies, and sometimes physicians, then pocket the difference as profit (assuming costs remain lower than CMS’ payment).
Oak Street Health’s Alleged Kickback Scheme
According to the U.S. Department of Justice, from September 2020 to December 2022, Oak Street Health operated a “Client Awareness Program” to increase its patient membership. Under this program:
- Third-party insurance agents contacted Medicare-eligible seniors and marketed Oak Street Health’s services.
- Agents referred interested seniors to Oak Street Health employees via phone calls or electronic submissions.
- Oak Street Health paid agents approximately $200 for each Medicare beneficiary referred or recommended.
These payments incentivized agents to prioritize Oak Street Health’s financial interests over the best interests of the seniors they were referring, violating the Anti-Kickback Statute , a federal law that prohibits offering or accepting kickbacks to generate health care business. As a result, Oak Street Health submitted thousands of false claims to Medicare.
Whistleblower Will Receive $9.9 Million Award
The allegations were originally brought by whistleblower Joseph Stinson under the qui tam provisions of the False Claims Act. These provisions allow private citizens to sue on behalf of the government and share in any recovery. For exposing the kickback scheme, Stinson will receive a whistleblower award of approximately $9.9 million. Mr. Stinson, president of an insurance services company, uncovered the fraud when Oak Street Health solicited his firm to participate in the fraudulent scheme.
The federal government has long pursued AKS violations in order to ensure that a patient’s best interest — not profit — drives medical decisionmaking.
This investigation and settlement help to ensure that patient choice is prioritized above a provider’s bottom line.
-Acting U.S. Attorney Morris Pasqual for the Northern District of Illinois
The case is U.S. ex rel. Stinson v. Oak Street Health, et al., No. 20-cv-7381 (N.D. Ill.).
Medicare Advantage Fraud: A Government Priority
Combatting fraud in the Medicare Advantage program is a top priority for the Department of Justice. As more Americans enroll in these plans, the potential for fraud grows.
The Oak Street Health settlement is part of the government’s ongoing efforts to root out illegal practices that undermine federal healthcare programs and patient care. As Deputy Assistant Attorney General Brian M. Boynton stated:
[DOJ is] committed to rooting out illegal practices committed by Medicare Advantage providers, insurance agents and brokers.
With Medicare Advantage plans now dominating the marketplace, fraud schemes are taking many forms. WLC applauds the Department of Justice for going after fraudsters in every step of the payment chain. Whether an insurance plan, a medical provider, or an on-the-street insurance agent or broker–all should be held accountable.
How Whistleblower Law Collaborative Can Help
At Whistleblower Law Collaborative LLC, our experienced qui tam whistleblower attorneys are dedicated to fighting healthcare fraud and protecting courageous whistleblowers. Our law firm has a proven track record of success in Medicare Advantage fraud cases, including a $217 million settlement with WellCare Health for upcoding in the Medicare Advantage program, among other allegations.
If you have information about potential Medicare Advantage fraud, contact us for a confidential, no-obligation consultation. With our expertise and commitment, we can help you navigate the complex process of blowing the whistle and work to hold wrongdoers accountable. Together, we can make a difference in the fight against fraud.
