By Anna Wilde Mathews, Christopher Weaver and Katherine Hamilton

The Justice Department filed a complaint alleging some of the biggest Medicare insurers paid kickbacks to brokers that sell such plans, seeking to grab market share and in some cases avoid enrollees with disabilities who might come with heavy health costs.

Prosecutors say in the complaint filed Thursday, that CVS Health's Aetna, Elevance Health and Humana paid hundreds of millions of dollars to get the brokers to steer customers into the insurers' Medicare Advantage plans.

Aetna and Humana also used payments to "pressure brokers to enroll fewer Medicare beneficiaries with disabilities, whom the insurers perceived as more expensive to cover," and thus less profitable, according to the complaint.

The brokers named in the complaint are eHealth, GoHealth and SelectQuote.

The complaint said the alleged transactions occurred from 2016 through at least 2021. The federal prosecutors are joining previously-sealed litigation filed by a whistleblower who is a former eHealth employee.

CVS Health and Humana both said they disagree with the allegations and plan to defend themselves vigorously. GoHealth said it has always complied with regulations and said the accusations against it include misrepresentations.

Elevance, eHealth and SelectQuote had no immediate comment.

Under Medicare Advantage, private insurers administer the benefits of the federal health-coverage program for older and disabled Americans. Patients often work with insurance brokers to choose a plan.

The program is a huge business for big insurers, and it has grown rapidly. Medicare Advantage insurers now cover more than half of all Medicare enrollees.

The federal complaint adds to the pressure on the Medicare insurers, who have already been facing headwinds including higher-than-expected costs that have hurt financial results, and heightened scrutiny of other industry tactics.

The new director of the federal Medicare agency, Mehmet Oz, pledged to crack down on industry practices that can generate questionable federal payments during his confirmation hearing in March, after senators questioned him about the findings of a Wall Street Journal investigation into the industry.

The Journal reported in February that the Justice Department was investigating UnitedHealth Group, the biggest Medicare insurer, with a focus on its practices for recording diagnoses that trigger extra payments, including at physician groups the company owns -- another issue covered in the Journal's investigation.

UnitedHealth said then that it wasn't aware of a new Justice Department investigation and any "suggestion that our practices are fraudulent is outrageous and false."

The new Justice Department complaint says that the brokers, who were supposed to offer impartial advice to their clients, instead steered them toward the insurers who paid the brokers the most money, "regardless of the quality or suitability of the insurers' plans." At one point, a broker executive wrote about Aetna, "more money will help drive more sales [be]cause your product is dog sh-t."

The insurers, for their part, hid the nature of the payments, often framing them as reimbursement for marketing or administrative costs, the suit says.

From 2017 to 2021, the complaint alleges, Elevance paid GoHealth $230 million in illegal payments to steer enrollees into its plans.

The complaint says that Humana, the second-largest Medicare Advantage insurer, carefully tracked the percentage of its enrollees who had disabilities, and pressed brokers to keep the share down, which they did through actions such as "filtering out calls, rejecting leads, and strategically altering the broker's marketing methods to avoid enrolling beneficiaries with disabilities."

When brokers enrolled too many people with disabilities into Humana plans, their payments from the insurer were threatened, the complaint says.

Aetna had a similar strategy, the complaint says, even though both insurers knew it was illegal to discriminate against people with disabilities. Two Aetna sales executives described efforts to treat enrollees differently based on their disabilities as "a compliance risk, " something "[w]e should NOT be talking about," and a "[v]ery big no-no."

But, in one case, the complaint alleges, a senior Aetna sales executive said that in an upcoming meeting with a broker, he planned to "completely rip him a new one over not only their volume but also their extreme U65 mix," referring to the share of enrollees who were younger Medicare beneficiaries. Those who aren't yet 65 generally must have disabilities to qualify for the program.

In another case, a broker emailed that Aetna was "jazzed" that the broker had reduced the portion of disabled people it channeled to the company from 25% to 15%.

Write to Anna Wilde Mathews at Anna.Mathews@wsj.com, Christopher Weaver at Christopher.Weaver@wsj.com and Katherine Hamilton at katherine.hamilton@wsj.com

(END) Dow Jones Newswires

May 01, 2025 17:20 ET (21:20 GMT)

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