Humana has agreed to pay $90 million to settle allegations of fraudulent practices in its Medicare Part D bids, revealing issues in prescription drug coverage.
What happened
Humana, one of the largest providers of Medicare Part D plans, has agreed to pay $90 million to settle a lawsuit filed by a former actuary, Steven Scott. The lawsuit, which was filed in 2016, accused the insurer of submitting fraudulent bids to the Centers for Medicare and Medicaid Services (CMS) for Part D contracts between 2011 and 2017.
The crux of the allegations was that Humana was inflating its costs in the bids submitted to the government, allowing the company to secure higher-paying contracts. According to the whistleblower, this practice resulted in Humana benefiting from cost savings of hundreds of millions of dollars, while Medicare beneficiaries were forced to pay more for their medications than Congress had intended.
Going deeper
The lawsuit further claimed that Humana was maintaining two sets of books - one for the government bids and another for its internal use. This practice, the whistleblower alleged, enabled Humana to underreport its actual anticipated costs, thereby securing more lucrative Part D contracts.
The Department of Justice initially investigated the allegations but ultimately decided not to intervene in the case. Nevertheless, the whistleblower, Steven Scott, pressed on with the lawsuit, which was eventually settled out of court.
What was said
In the settlement agreement, Humana maintained that its drug prescription plan was fully compliant with all laws and regulatory requirements and that the actuarial assumptions in the plan were reasonable. The company stated that the decision to settle the lawsuit was made to avoid the uncertainty and cost of a lengthy jury trial.
Edward Arens, a partner at the law firm representing the whistleblower, Phillips & Cohen, praised the courage of their client, Steven Scott, for bringing the alleged fraudulent practices to light. "This practice would never have come to light if our brave client, Steven Scott, had not stepped forward to report it," Arens said.
Why it matters
The Humana settlement stands out for several reasons. First, it reveals the ongoing difficulties in maintaining transparency and accountability within the Medicare Part D program, which serves over 54 million Medicare recipients with prescription drug coverage.
It also shows how whistleblowers contribute to uncovering fraud and misconduct in the healthcare sector. Individuals like Steven Scott help protect the integrity of government-funded programs and the interests of beneficiaries by stepping forward.
Lastly, the settlement demonstrates that even unacknowledged fraudulent practices can lead to significant financial and reputational damage for healthcare providers. As the industry faces challenges related to cost, quality, and access, it is beneficial for all parties, including insurers, to uphold high standards of transparency and ethical behavior.
FAQs
What is a whistleblower?
A whistleblower is an individual who reports illegal or unethical behavior within an organization, often related to fraud, abuse, or other misconduct. This person can be an employee, contractor, or any individual who has inside knowledge of the wrongdoing and chooses to disclose it, typically to regulatory authorities or the media, in order to address and correct the issue.
What is Medicare Part D?
Medicare Part D is a federal program that provides prescription drug coverage to individuals enrolled in Medicare. It helps cover the cost of prescription medications and is offered through private insurance plans that are approved by Medicare. Beneficiaries can choose from a variety of plans based on their medication needs and preferences.
How does Medicare Part D differ from Medicare Part A and Part B?
Medicare Part A covers hospital insurance, while Medicare Part B covers medical services and supplies. Medicare Part D specifically provides prescription drug coverage. Unlike Part A and Part B, which are offered directly through the federal government, Part D is administered through private insurance companies.
Farah Amod
