A major Medicare Advantage company has paid the government more than $342 million to help resolve allegations that it overcharged the federal health care program for years.
Elevance Health, which covers about 2 million people with Medicare, sent the money to the Centers for Medicare and Medicaid Services via wire transfer on May 27, court records show. Government lawyers disclosed the payment in a June 22 court filing.
In an email to CMS staff, Elevance described the money as a “remittance of the full overpayment amount” estimated by government audits, court records show. Company spokesperson Leslie Porras told KFF Health News in a statement that Elevance Health “continues to engage in constructive dialogue” with CMS. “We remain optimistic that a resolution can be reached and value our long-standing relationship with CMS,” he said.
The payment was made in response to a CMS enforcement action in February, in which the agency threatened to suspend enrollment in Elevance Medicare Advantage plans unless the company corrected what CMS called “substantial and persistent noncompliance” with federal regulations that require health plans to submit accurate billing data and return any overpayments when discovered.
It appears to be the first time CMS has successfully pressured a Medicare Advantage health plan to return tens of millions of dollars in alleged overpayments, even though agency officials have known for years that many health plans have overbilled the program, according to audits by government staff.
“I've never heard of anything like this before,” said David Lipschutz, an attorney with the Center for Medicare Advocacy, a nonprofit public interest law firm. “Usually the plans seem to block everything and try to delay any payments for years.”
David Meyers, an associate professor at Brown University School of Public Health, called the payment “substantial” and “a step in the right direction” toward holding the industry accountable.
“It's a big win for CMS to get this much,” he said.
More than 35 million Americans, about 55% of people with Medicare, have enrolled in private Advantage health insurance plans, which offer additional benefits, such as hearing aids and dental coverage, that traditional Medicare does not cover.
Joining the plans may also be cheaper for patients than purchasing a supplemental insurance policy that fills gaps in traditional Medicare.
However, whether Medicare Advantage is a good deal for taxpayers is hotly debated.
Health plans have been the subject of dozens of whistleblower lawsuits and government investigations alleging they often exaggerate how sick patients are to improperly increase their payments, the industry claims. Medicare pays health plans higher rates for sicker patients, but requires plans to bill only for conditions that are properly documented in the patient's medical records.
Researchers have also concluded that Medicare overpays billions of dollars to health plans each year because of flaws in medical coding that result in higher-than-justified bills.
Whistleblower lawsuits, mostly filed by former employees of healthcare companies, have long served as the primary tool for recovering alleged overpayments. In January, Kaiser Permanente agreed to pay $556 million to resolve Justice Department allegations that it billed the government for medical conditions that patients did not have, the largest such penalty to date. In a statement posted on its website, the company said it settled the case “to avoid the delay, uncertainty and cost of protracted litigation.”
By contrast, CMS's efforts to prevent Medicare Advantage plans from overcharging have largely failed.
In 2014, for example, CMS backed away from a proposed regulation that would have cracked down on overbilling amid an “uproar” of industry opposition. And even when CMS audits uncovered tens of millions of dollars in overpayments, agency officials collected only a small fraction of that amount.
CMS's threat to prevent Elevance from enrolling new members may open a new approach.
“The payment that Elevance is making here is not trivial,” said Matthew Fiedler, a health policy researcher at the Brookings Institution.
But he noted that it represents a very small fraction of the total the company receives from Medicare. He said making a big dent in the overpayment problem would require CMS to collect “many similar payments” from “all” Medicare Advantage insurers.
“I don't think there's a clear reason to believe that at this point,” Fiedler said.
Richard Kronick, a former federal health policy official and professor at the University of California-San Diego, agreed that the payment reflects a small portion of the company's revenue. But he said “it was still a sizeable check to sign.”
Kronick said the action reflects “maybe a bit of a show of force” by CMS to beef up enforcement.
CMS did not immediately respond to a request for comment. It is unclear from court records whether the payment will end CMS's threat to ban Elevance from registering new members.
If so, it could be a relative bargain. In an April filing with the Securities and Exchange Commission, the company said its “current best estimate” of “potential exposure” in the case was approximately $935 million.
Elevance has been at odds with the federal government over its billing practices since 2020, when the Department of Justice filed a False Claims Act lawsuit against the company, then known as Anthem. That case is pending.
Court documents in that case revealed the company's payment to CMS. In an email that was part of the court filing, a company official confirmed that it had sent the wire transfer in the amount of $342,209,085.30 on May 27 and said the payment was related to the threatened registration ban. The company also stated that it was challenging CMS' enforcement action, calling it “unprecedented.”
In defending itself against the Justice Department's lawsuit, Elevance denied wrongdoing and argued that CMS knew about its billing practices for years and took no action.
Meyers, the Brown University professor, said CMS's success in collecting payments from Elevance may encourage greater enforcement.
“Whether this is a radical change remains to be seen,” he said.
