CVS' Oak Street Health paying $60M over alleged Medicare Advantage kickbacks

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Oak Street Health, a subsidiary of CVS, is paying $60 million to the federal government to resolve allegations that it violated the False Claims Act by paying kickbacks to third-party insurance agents in exchange for recruiting seniors to Oak Street Health's primary care clinics.

The government alleged that, in 2020, Oak Street Health developed a program to increase patient membership called the Client Awareness Program. Under the program, third-party insurance agents contacted seniors who were eligible for, or enrolled in Medicare Advantage, and delivered marketing messages designed to generate interest in Oak Street Health.

Agents then referred interested seniors to an Oak Street Health employee via a three-way phone call, otherwise known as a "warm transfer," and/or an electronic submission.

In exchange, Oak Street Health paid agents typically $200 per beneficiary referred or recommended. These payments incentivized agents to base their referrals and recommendations on the financial motivations of Oak Street Health rather than the best interests of seniors, according to the Department of Justice.

The settlement resolves allegations that, from September 2020 through December 2022, Oak Street Health knowingly submitted, and caused the submission of, false claims to Medicare arising from kickbacks to agents that violated the Anti-Kickback Statute.

WHAT'S THE IMPACT?

The Anti-Kickback Statute prohibits anyone from offering or paying, directly or indirectly, any remuneration – which includes money or any other thing of value – to induce referrals of patients, or to provide recommendations of items or services covered by Medicare, Medicaid and other federally funded programs. 

Under the Medicare Advantage Program, also known as Part C, Medicare beneficiaries have the option to obtain their healthcare through MA plans, which are privately-operated insurance plans. Some MA plans contract with healthcare providers, including Oak Street Health, to provide their plan members with primary care services.

The civil settlement includes the resolution of claims brought under the qui tam, or whistleblower provisions of the False Claims Act by Joseph Stinson. Under those provisions, a private party can file an action on behalf of the United States and receive a portion of any recovery.

"Kickbacks impose hidden costs on the federal healthcare system and compromise medical choice and decision-making," said Special Agent in Charge Mario Pinto of the Department of Health and Human Services Office of the Inspector General.

THE LARGER TREND

CVS completed its acquisition of Oak Street Health last year.

The all-cash transaction was valued at around $10.6 billion. Oak Street Health is a multi-payer, value-based primary care company focused on older adults, with a care model and technology platform it describes as scalable.

The organizations said the acquisition would benefit patients' long-term health by reducing care costs and improving outcomes, particularly for those in underserved communities. More than 50% of Oak Street Health's patients have a housing, food or isolation risk factor, they said.

Jeff Lagasse is editor of Healthcare Finance News.
Email: jlagasse@himss.org
Healthcare Finance News is a HIMSS Media publication.