DOJ Alleges Kickbacks in Medicare Advantage Broker Commissions

A recent lawsuit filed by the U.S. Department of Justice alleges that major insurers Aetna, Elevance Health, and Humana engaged in paying substantial kickbacks, totaling hundreds of millions of dollars, to large insurance brokerages such as eHealth, GoHealth, and SelectQuote to steer Medicare beneficiaries into Medicare Advantage plans.

This allegation covers payment practices between 2016 and 2021. The payments were purportedly disguised as marketing or sponsorship fees to bypass regulatory limits on broker commissions. The lawsuit indicates that brokers received financial incentives often exceeding $200 per enrollee to promote certain Medicare Advantage plans regardless of their suitability for the beneficiary. \n\nMedicare Advantage plans, which combine government benefits with additional private-sector services like vision or fitness, currently enroll over half of Medicare recipients.

While these plans are popular, concerns persist around higher taxpayer costs versus original Medicare and clinical authorization requirements tied to private plan coverage. The DOJ lawsuit intensifies scrutiny on broker incentives and marketing practices amid ongoing debates on Medicare Advantage's role in the federal insurance landscape.

The case alleges improper switching and enrollment practices, such as beneficiaries being enrolled without explicit consent, and biased steering away from disabled individuals who tend to be more expensive to insure. Specifically, the suit highlights examples where disabled beneficiaries were ignored or routed away from Medicare Advantage enrollment opportunities. 

Also, there are claims that individuals were shifted into plans causing significant out-of-pocket expenses due to coverage differences from original Medicare.

Regulatory measures introduced under the Biden administration sought to rein in excessive broker payments by capping commissions and administrative fees, but parts of these rules remain stayed due to ongoing legal challenges. Existing commission limits for Medicare Advantage plans were around $539 per enrollee in 2021, varying by state, and have increased slightly since then. The payment structure inherently incentivizes brokers to favor private Medicare Advantage plans over original Medicare with supplemental plans, which have much lower broker commissions. Industry participants including the named insurers and brokerages have disputed the allegations and intend to defend against the lawsuit.

The case also underscores broader systemic issues in Medicare Advantage marketing, commission structures, and enforcement of fair market value standards for broker payments. Experts recommend beneficiaries seek unbiased advice from federally funded State Health Insurance Assistance Programs rather than brokers who might be influenced by commission incentives. The lawsuit also highlights the need for legislative and regulatory reforms to address financial incentives that could compromise plan suitability for Medicare recipients.

Despite the lawsuit’s potential to drive policy changes, congressional attention may be limited due to pressing budgetary priorities. Nevertheless, the large sums involved draw significant attention to how broker incentives can divert funds from direct patient care and influence plan selection. The DOJ suit contributes to ongoing discussions on ensuring transparency, fairness, and compliance in Medicare Advantage enrollment processes within the U.S. insurance market.