This HealthAffairs article analyzes the ongoing litigation between the Department of Justice (DOJ) and Medicare Advantage brokers on the use of administrative services to disguise illegal kickbacks. The DOJ intervened in the whistleblower lawsuit, alleging that the MA Organizations (MAOs) paid the broker defendants hundreds of millions of dollars in ”kickbacks” disguised as ”marketing” funds to influence brokers to sell their plans.
- The DOJ alleged that MAOs and brokers incorrectly labeled kickbacks as marketing payments while the MAOs and brokers claimed these payments were in fact marketing services. The court agreed with the DoJ that these payments were not administrative payments based on the substance of the agreement.
- Brokers argued that the Anti-Kickback Statute (AKS) targets “medical care kickbacks” and not health insurance plans. The court disagreed with defendants noting that the AKS was designed to strengthen the Medicare and Medicaid programs, and its scope includes insurers.
- The court agreed with DoJ that MAOs violated the False Claims Act (FCA) by falsely certifying compliance with the AKS and anti-discrimination laws. Brokers then argued it was MAOs that violated the FCA, not the brokers, since they submitted the false claims, but the court still found the brokers’ conduct violated the FCA.
While the court’s decision reinforced DOJ’s reliance on the FCA to address MA marketing abuses, there are still significant roadblocks to passing broker regulations. Additionally, ongoing discussions of the constitutionality of whistleblower lawsuits could damage efforts to ensure integrity in Medicare. This lawsuit demonstrates the importance of the FCA in deterring bad actors, but there is still a need for meaningful regulatory oversight in addition to litigation.