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US Claims Medicare Insurers, Brokers Used Illegal Kickbacks

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(Bloomberg) -- The US sued top health insurance companies and brokers, alleging they used illegal kickbacks to steer members into certain private Medicare Advantage plans.

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The complaint names CVS Health Corp., Elevance Health Inc. and Humana Inc., along with broker companies eHealth Inc., GoHealth Inc. and SelectQuote Inc.

In the lawsuit, initiated by a whistleblower in 2021 and unsealed Thursday, the Justice Department claims that brokers told their agents to sell Medicare Advantage based on the kickbacks and blocked the sale of insurance plans that didn’t pay. The complaint, which covers alleged conduct from 2016 through 2021, further alleges that Humana and CVS’ Aetna pressured brokers to enroll fewer disabled people in their plans.

The complaint “presents a new overhang” for brokers that are set to report earnings starting next week, RBC Capital Markets Ben Hendrix wrote in a research note.

Medicare Advantage is a private version of Medicare, the government health plan mostly for people in the US who are 65 and older. Over half of the Medicare population is enrolled in these private plans. People often enroll with the help of a broker, which may be paid commissions by insurance companies.

Shares of GoHealth closed down 10% and SelectQuote shares dropped almost 20%, while eHealth shares finished the day unchanged. Humana and Elevance stock both fell less than 3%, while CVS shares rose 4% on a favorable earnings report.

Representatives for Elevance, CVS and Humana disputed the allegations and said they intend to defend themselves in vigorously in court.

A representative of GoHealth said the company has always complied with the rules and disagrees with the government’s allegations, “which are full of misrepresentations and inaccuracies.” An eHealth spokesperson said it’s cooperated with the investigation, believes the claims have no merit, and will defend itself.

An email to SelectQuote wasn’t immediately returned.

Congress has investigated these payments before. In addition, eHealth, GoHealth and SelectQuote previously disclosed that they had received subpoenas from the US attorney’s office in Massachusetts in 2022 over their arrangements with insurers. That office is one of several involved in the lawsuit.