On the heels of recent scrutiny of health care professional ("HCP") arrangements with brokers and agents and Medicare Advantage Organization ("MAO") arrangements with providers, including through the U.S. Department of Justice's settlements with MCS Advantage1 and Oak Street Health,2 the U.S. Department of Health and Human Services Office of Inspector General ("OIG") issued a special fraud alert concerning marketing arrangements with MAOs, HCPs, and brokers and agents that it views as carrying a risk of fraud and abuse.3 OIG's December 11, 2024 special fraud alert focuses on two types of arrangements: (1) marketing arrangements between MAOs and HCPs, and (2) arrangements between HCPs and agents and brokers. The special fraud alert also offers a range of characteristics that OIG views as suspect in these arrangements with HCPs.
Key Concerns:
- MAO Payments to HCPs for Referrals: OIG warns against MAOs providing remuneration, such as gift cards and in-kind payments, to HCPs or their staff for patient referrals for enrollment in an MA plan. Although CMS permits HCPs to engage in limited marketing activities on behalf of MAOs, they cannot accept compensation for such activities. OIG explains its view that such arrangements may lead to inappropriate enrollments, with patients joining plans that do not meet their needs, as well as potential discrimination against certain enrollees based on profit potential. For instance, OIG is concerned that an MAO may use these payments to HCPs to attract healthier, less costly enrollees while avoiding or discouraging costlier ones.
- HCP Payments to Agents and Brokers for Referrals: OIG also cautions against HCPs paying agents and brokers to recommend or refer patients to the HCP. OIG expresses the concern that enrollees might unknowingly rely on these financially motivated recommendations, especially if they have an established relationship with the agent or broker, which could prioritize agents' and brokers' interests over their own.
The special fraud alert acknowledges in a footnote that payments from MAOs to agents, brokers, and others may, in some instances, result in abusive arrangements, but those arrangements were not OIG's focus in issuing the alert.
Risks and Implications:
As OIG views them, these arrangements can lead to improper steering, inappropriate enrollments, and anticompetitive conduct. OIG acknowledges that MA plan selection can be a confusing and overwhelming process, to which HCPs, agents, and brokers can provide guidance, but, according to OIG, this dynamic invites the abuse of trust and acts of self-interest, sometimes to the detriment of enrollees. Individuals may also rely on agents and brokers when selecting an HCP. OIG explained that financial interests may distort guidance from HCPs, agents, and brokers on the enrollment or HCP selection process, causing enrollees to switch to costlier or unsuitable plans without their full awareness or to inadvertently choose an HCP that provides low-quality care or is not the most appropriate for their medical needs. Additionally, OIG flagged a risk of unfair competition, with referrals potentially favoring larger MAOs or certain HCPs that can afford to make such payments.
Laws Implicated:
OIG considers these marketing arrangements to potentially implicate several federal laws, including the federal anti-kickback statute, which prohibits offering, paying, soliciting, or receiving any remuneration to induce or reward referrals of items or services reimbursable by a federal health care program.4 OIG explains that arrangements between MAOs and HCPs could trigger the federal anti-kickback statute if an MAO pays an HCP to refer enrollees to a particular MAO. Similarly, arrangements between HCPs and agents and brokers could trigger the statute if an HCP pays an agent or broker for patient referrals or recommendations.5
Suspect Characteristics:
OIG identifies several "suspect characteristics" of marketing arrangements that may indicate a heightened risk of fraud and abuse, taken together or alone. These include:
- MAOs, agents, brokers, or any other individual or entity
offering or paying remuneration:
- To HCPs or their staff for referrals or recommendations to a particular MAO or MA plan.
- To HCPs as payment for legitimate services that is actually intended to be payment for the HCP's referrals.
- To HCPs or their staff for patient information to potentially use for marketing.
- To HCPs that is contingent upon or varies with the demographics or health status of patients.
- To HCPs that varies with referrals for enrollment in an MA plan.
- HCPs offering or paying remuneration to an agent, broker, or
other third party:
- That is contingent upon or varies with the demographics or health status of patients.
- To recommend that HCP or refer an enrollee to that HCP.
- That varies with the number of individuals referred to the HCP.
Key Takeaways:
OIG's special fraud alert, its first issued since 2022, follows the trend of increased scrutiny of marketing arrangements in the MA space. Noting that abusive marketing practices have spiked in recent years, OIG's special fraud alert underscores the need for MAOs and HCPs to structure their relationships with each other and with brokers and agents carefully to ensure compliance with federal laws.
Footnotes
1 Press Release, U.S. Department of Justice, MCS Advantage Agrees to Pay 4.2 Million Dollars to Resolve Allegations That It Violated the False Claims Act and Anti-Kickback Statute (July 1, 2022), https://www.justice.gov/usao-pr/pr/mcs-advantage-agrees-pay-42-million-dollars-resolve-allegations-it-violated-false-claims.
2 Press Release, U.S. Department of Justice, Oak Street Health Agrees to Pay $60 Million to Resolve Alleged False Claims Act Liability for Paying Kickbacks to Insurance Agents in Medicare Advantage Patient Recruitment Scheme (Sept. 18, 2024), https://www.justice.gov/opa/pr/oak-street-health-agrees-pay-60m-resolve-alleged-false-claims-act-liability-paying-kickbacks.
3 U.S. Department of Health and Human Services, Office of Inspector General, Special Fraud Alert: Suspect Payments in Marketing Arrangements Related to Medicare Advantage and Providers (Dec. 11, 2024), https://oig.hhs.gov/documents/special-fraud-alerts/10092/Special%20Fraud%20Alert%3A%20Suspect%20Payments%20in%20Marketing%20Arrangements%20Related%20to%20Medicare%20Advantage%20and%20P.pdf.
4 42 U.S.C. § 1320a-7b(b).
5 In addition to the Federal anti-kickback statute, OIG explained its view that these arrangements could also implicate and lead to liability under OIG's exclusion authority related to kickbacks, the Civil Monetary Penalties Law provision for kickbacks, OIG's authority to assess civil monetary penalties for contracting organization misconduct, the criminal health care fraud statute, and the False Claims Act.
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