Kickbacks in the Medicare Advantage Program: $12.5 million Settlement in Whistleblower Case

The first of its kind FCA case involves Roche and Medicare Advantage insurer Humana.

The recent settlement of a whistleblower case involving the government’s Medicare Advantage program might be a sign of things to come for litigation filed under the False Claims Act (FCA), including those initiated by whistleblowers. On Monday, it was announced that the pharmaceutical company Roche and Medicare Advantage insurer Humana have agreed to pay $12.5 million to the U.S. government to resolve allegations that the companies violated the anti-kickback statute. This is the first FCA settlement resulting from a pharmaceutical company’s alleged payment of kickbacks to a Medicare Advantage Organization.

Medicare Advantage, also known as Part C of the Medicare program, is a managed care model wherein the government pays Medicare Advantage Organizations (private insurance companies such as Humana) premiums to insure Medicare beneficiaries. The premium amounts are determined by the demographic makeup and the health status of the insured beneficiaries, with sicker, older members drawing a higher payment from the government than younger, healthier ones. This model contrasts with “traditional” Medicare (Parts A and B of the program), wherein the government pays for each individual healthcare service performed, in what is known as a fee-for-service model. In the Medicare Advantage program, the amounts of government payments are not directly linked to which healthcare services are performed.

Crystal Derrick, an account manager for Roche’s diabetes testing products and the whistleblower who initiated this case in 2014, alleged that Humana and Roche entered into a kickback arrangement wherein Roche forgave certain Humana debts in exchange for Humana purchasing Roche diabetes testing supplies – and favoring those supplies over competitors’ products in Humana’s Medicare Advantage plans. Ms. Derrick alleged that this was a violation of the anti-kickback statute, which prohibits medical decision-makers from paying or receiving kickbacks, remuneration, or anything of value in exchange for referrals of patients who will receive treatment paid for by government healthcare programs such as Medicare. Ms. Derrick also alleged that Roche fired her as retaliation for blowing the whistle on the company’s corrupt scheme.

Humana argued that because of the payment mechanism of the Medicare Advantage program, it collected no additional money from the government due to Roche’s debt forgiveness. Specifically, the insurer argued that because Medicare Advantage payments are not based on the cost of provided services, but only the demographics and health status of beneficiaries, it did not receive a benefit. Derrick argued that Humana had agreed to follow all conditions of the Medicare program, including not violating the anti-kickback statute. In 2018, a federal court in Chicago sided with the whistleblower and denied Humana’s motion to dismiss the case.

The case was brought under the whistleblower provisions of the False Claims Act, which allows private parties like Derrick to file suit on behalf of the government, alleging that the government was defrauded. To incentivize whistleblowing, the government shares a portion of any recovery with the whistleblower. Here, Ms. Derrick will receive 29 percent of the recovery, or just over $3.6 million.

As this case demonstrates, whistleblower insiders who are willing to come forward and share inside information regarding the goings-on within Medicare Advantage Organizations can help the government recover taxpayer dollars.

Print Friendly, PDF & Email

Mary Inman, Esq.

Mary Inman is a partner and co-founder of Whistleblower Partners LLP, a law firm dedicated to representing whistleblowers under the various U.S. whistleblower reward programs. Mary and her colleagues have pioneered a series of successful whistleblower cases against prominent health insurers, hospitals, provider groups, and vendors under the False Claims Act alleging manipulation of the risk scores of Medicare Advantage patients. Mary is a recognized expert and frequent author, commentator, and speaker on frauds in the healthcare industry, particularly those exposed by whistleblowers. Mary is a member of the RACmonitor editorial board and a popular panelist on Monitor Monday.

Related Stories

Remain Compliant – and Take the Money

Remain Compliant – and Take the Money

Our first topic today is local coverage determinations (LCDs) and variation. I have written in the past about national and local coverage determinations, and I

Read More

Leave a Reply

Please log in to your account to comment on this article.

Featured Webcasts

Leveraging the CERT: A New Coding and Billing Risk Assessment Plan

Leveraging the CERT: A New Coding and Billing Risk Assessment Plan

Frank Cohen shows you how to leverage the Comprehensive Error Rate Testing Program (CERT) to create your own internal coding and billing risk assessment plan, including granular identification of risk areas and prioritizing audit tasks and functions resulting in decreased claim submission errors, reduced risk of audit-related damages, and a smoother, more efficient reimbursement process from Medicare.

April 9, 2024
2024 Observation Services Billing: How to Get It Right

2024 Observation Services Billing: How to Get It Right

Dr. Ronald Hirsch presents an essential “A to Z” review of Observation, including proper use for Medicare, Medicare Advantage, and commercial payers. He addresses the correct use of Observation in medical patients and surgical patients, and how to deal with the billing of unnecessary Observation services, professional fee billing, and more.

March 21, 2024
Top-10 Compliance Risk Areas for Hospitals & Physicians in 2024: Get Ahead of Federal Audit Targets

Top-10 Compliance Risk Areas for Hospitals & Physicians in 2024: Get Ahead of Federal Audit Targets

Explore the top-10 federal audit targets for 2024 in our webcast, “Top-10 Compliance Risk Areas for Hospitals & Physicians in 2024: Get Ahead of Federal Audit Targets,” featuring Certified Compliance Officer Michael G. Calahan, PA, MBA. Gain insights and best practices to proactively address risks, enhance compliance, and ensure financial well-being for your healthcare facility or practice. Join us for a comprehensive guide to successfully navigating the federal audit landscape.

February 22, 2024
Mastering Healthcare Refunds: Navigating Compliance with Confidence

Mastering Healthcare Refunds: Navigating Compliance with Confidence

Join healthcare attorney David Glaser, as he debunks refund myths, clarifies compliance essentials, and empowers healthcare professionals to safeguard facility finances. Uncover the secrets behind when to refund and why it matters. Don’t miss this crucial insight into strategic refund management.

February 29, 2024
2024 SDoH Update: Navigating Coding and Screening Assessment

2024 SDoH Update: Navigating Coding and Screening Assessment

Dive deep into the world of Social Determinants of Health (SDoH) coding with our comprehensive webcast. Explore the latest OPPS codes for 2024, understand SDoH assessments, and discover effective strategies for integrating coding seamlessly into healthcare practices. Gain invaluable insights and practical knowledge to navigate the complexities of SDoH coding confidently. Join us to unlock the potential of coding in promoting holistic patient care.

May 22, 2024
2024 ICD-10-CM/PCS Coding Clinic Update Webcast Series

2024 ICD-10-CM/PCS Coding Clinic Update Webcast Series

HIM coding expert, Kay Piper, RHIA, CDIP, CCS, reviews the guidance and updates coders and CDIs on important information in each of the AHA’s 2024 ICD-10-CM/PCS Quarterly Coding Clinics in easy-to-access on-demand webcasts, available shortly after each official publication.

April 15, 2024

Trending News

Happy National Doctor’s Day! Learn how to get a complimentary webcast on ‘Decoding Social Admissions’ as a token of our heartfelt appreciation! Click here to learn more →

Happy World Health Day! Our exclusive webcast, ‘2024 SDoH Update: Navigating Coding and Screening Assessment,’  is just $99 for a limited time! Use code WorldHealth24 at checkout.

SPRING INTO SAVINGS! Get 21% OFF during our exclusive two-day sale starting 3/21/2024. Use SPRING24 at checkout to claim this offer. Click here to learn more →