OIG warns against payment schemes in the Medicare Advantage program

The Office of Inspector General (OIG) has issued a Special Fraud Alert warning of potential fraud and abuse risks in marketing arrangements for Medicare Advantage plans.

What happened

On December 11, the U.S. Department of Health and Human Services Office of Inspector General (OIG) published a Special Fraud Alert warning against payment arrangements in the Medicare Advantage (MA) program that could potentially violate federal health care fraud and abuse laws. The alert focuses on suspect payment schemes that improperly steer Medicare enrollees to specific MA plans or providers based on financial incentives, rather than the enrollees’ needs. These practices could implicate the Federal Anti-Kickback Statute (AKS), the False Claims Act (FCA), and other regulations designed to safeguard Medicare beneficiaries.

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Going deeper

The OIG identified two key types of remuneration arrangements that have been the subject of recent AKS and FCA settlements:

• Payments from Medicare Advantage Organizations (MAOs) to Healthcare providers: Payments to healthcare providers or their staff tied to MA plan marketing or enrollment activities.
• Payments from healthcare providers to agents and brokers: Remuneration to agents, brokers, or other third parties in exchange for referring Medicare enrollees to specific healthcare providers.

The alert demonstrated characteristics of these arrangements that increase the risk of fraud and abuse, such as:

• Bonuses or gift cards are given to healthcare providers for referring patients to specific MA plans.
• Payments are disguised as legitimate service fees but intended to reward referrals.
• Compensation that varies based on the demographics or health status of referred individuals.
• Financial incentives tied to the volume of enrollees referred.

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What was said

In its Special Fraud Alert, the Office of Inspector General (OIG) expressed concern over specific marketing and compensation arrangements linked to the Medicare Advantage (MA) program. Through its investigations, OIG has uncovered problematic compensation practices that raise concerns under fraud and abuse laws, including the Federal Anti-Kickback Statute. The OIG stated: “We are concerned that these arrangements could result in harms against which the Federal anti-kickback statute is designed to protect. These harms include unfair competition and the improper steering of Medicare enrollees to particular MA plans or health care providers based on lucrative incentives rather than the most appropriate option for the enrollee.”

OIG highlighted two major risks:

• Payments from MAOs to Health Care Professionals (HCPs) or their staff: These payments often involve bonuses, gift cards, or disguised remuneration tied to referrals, patient information sharing, or enrollment metrics. Such arrangements can result in individuals being improperly enrolled in unsuitable MA plans, sometimes without their knowledge.
• Payments from HCPs to agents or brokers: These include financial incentives for agents or brokers to refer enrollees to specific providers or MA plans. These referrals can mislead enrollees, prioritizing financial gain over the enrollee’s health needs.

OIG noted a troubling rise in abusive marketing practices, “When inappropriate steering is influenced by payments, enrollees can face significant and detrimental consequences, including higher out-of-pocket costs, low-quality care, and limited access to preferred providers.”

The alert also listed suspect characteristics of these arrangements, such as compensation contingent on patient demographics, health status, or referral volume. These practices, OIG warned, pose risks to Medicare enrollees and the integrity of the Medicare program.

Enrollees, OIG stressed, often rely on agents and brokers to navigate complex MA plan choices. Misguided recommendations influenced by financial incentives can lead to unfair competition and harm, including discrimination against vulnerable populations.

In the know

A Medicare Advantage (MA) plan, also known as Medicare Part C, is an alternative to Original Medicare (Parts A and B) offered by private insurance companies approved by the Centers for Medicare & Medicaid Services (CMS). These plans provide all the benefits of Original Medicare and often include additional services such as vision, dental, hearing, and prescription drug coverage (Part D). MA plans come in various types, including Health Maintenance Organizations (HMOs) and Preferred Provider Organizations (PPOs), and typically operate within a network of healthcare providers. While MA plans can offer greater convenience and extra benefits, they may also include restrictions, such as the requirement to use in-network providers or obtain referrals for specialist care. Enrollees often choose MA plans for their comprehensive coverage and cost-saving features, but plan details and suitability can vary widely based on an individual’s healthcare needs.

Why it matters

This announcement serves as a reminder for healthcare providers, agents, and MAOs to prioritize compliance and transparency in their business practices. Stakeholders are encouraged to consult with experienced healthcare attorneys to ensure that their arrangements adhere to federal and state regulations, safeguarding the integrity of the Medicare Advantage program.

FAQs

What are the penalties for violating the Anti-Kickback Statute?

Penalties can include criminal charges, fines, exclusion from federal healthcare programs, and liability under the False Claims Act for submitting fraudulent claims to Medicare.

Are Medicare enrollees aware of these fraudulent arrangements?

In many cases, enrollees are unaware of these financial arrangements and may unknowingly select plans or providers based on misleading guidance from agents, brokers, or healthcare providers.