CVS-Owned Subsidiary to Pay $60 Million for Medicare Advantage Kickback Scheme
CVS subsidiary Oak Street Health, which owns clinics in major cities across the U.S., settled a federal lawsuit by agreeing to pay $60 million. The feds claimed the medical company violated federal law by paying referral kickbacks. Promotional photo by Oak Street Health.
The insurance agents allegedly received the kickbacks for recruiting Medicare beneficiaries to frequent Oak Street Health clinics. Oak Street Health is headquartered in Chicago.
Paying for medical referrals goes against the Anti-Kickback Statute, a law prohibiting federal health programs from paying for or financially rewarding referrals. It also violates the False Claims Act, which, if penalized, can cost the offender up to three times what they claim from the government and an additional $11,000 per claim afterward.
‘Client Awareness Program’
From around September 2020 to January 2022, Oak Street Health paid agents through the Client Awareness Program, the settlement detailed. The agents provided “warm leads” to Oak Street Health employees, connecting Medicare beneficiaries to them through a three-way call. If the referral was eligible, Oak Street Health paid the agent $200 for the referral.
Oak Street Health specifically wanted Medicare recipients and barred payment to the agents if the referrals were not eligible for Medicare, according to the settlement. Oak Street Health paid agents over $4 million through the program.
Nationwide Fraud Crackdown
This is one of several settlements made by entities found to have violated the False Claims Act since the DOJ announced in a June 27 press conference that it was cracking down on health care fraud in a nationwide initiative. As of that date, 192 defendants accounting for billions of dollars in losses had already been charged, according to the DOJ press release.
Dunes Surgical Hospital
Dunes Surgical Hospital in South Dakota agreed to pay $12.7 million on Sept. 16 to settle allegations that they gave substantial contributions to a nonprofit affiliate of a group of doctors who referred their patients to Dunes, according to another DOJ press release. The scheme ran between 2014 and 2019 and targeted Medicare, TriCare, and Medicaid programs.
Dunes paid between $300,000 and $375,000 per year to the nonprofit in exchange for the physician referrals, as detailed in the settlement. Dunes also provided clinic space, staff, and supplies for little to no cost in exchange for the physicians making referrals to Dunes for healthcare items and services.
Davita
DaVita Inc., based in Denver, Colorado, also violated the False Claims Act by paying kickbacks to vascular physicians and nephrologists to increase referrals to a former subsidiary, DaVita Rx, according to a DOJ press release.
Davita also agreed to purchase nine dialysis clinics in Portugal and Poland from a competitor if that competitor referred dialysis patients who received Medicare benefits, according to the settlement. They agreed on July 18 to pay $34,487,390 for the violation.
How to Report Medical Fraud
If you suspect Medicare fraud, you can report it by calling 1-800-MEDICARE or report it to the online hotline managed by the Department of Health and Human Services here.
For fraud related to Medicare Advantage or a Medicare drug plan, you can contact the Medicare Drug Safety Coordinator to make a report at 1-877-7SAFERX.
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