Elevance Health’s Major Settlement with Medicare
A significant Medicare Advantage provider has agreed to pay over $342 million to the government to settle claims of years of overbilling within the federal health care program.
Elevance Health, which serves approximately 2 million Medicare beneficiaries, transferred the amount to the Centers for Medicare and Medicaid Services (CMS) on May 27, as per court documents. This payment was revealed by government lawyers in a filing dated June 22.
According to an email sent to CMS employees, Elevance referred to the payment as a “remittance of the total amount of overpayments” determined through a government audit. A spokesperson for the company, Leslie Porras, expressed that Elevance is engaging in productive discussions with CMS, saying, “We are optimistic that we can reach a resolution and value our long-standing relationship with CMS.”
The settlement came after CMS indicated it would suspend new enrollments in Elevance Medicare Advantage plans unless the company addressed what it identified as “serious and persistent noncompliance” with federal regulations that mandate accurate claims submissions and repayment of identified overpayments.
This instance seems to mark a first for CMS in successfully compelling Medicare Advantage plans to refund substantial sums for overpayments—an issue officials have been aware of for years, as indicated by audits.
“I’ve never come across anything like this,” commented David Lipshutz from the Medicare Advocacy Center. “Typically, we see plans attempting to delay repayments for ages.”
David Myers, an associate professor at Brown University’s School of Public Health, described the payout as “substantial” and a “step in the right direction” towards accountability for the industry, noting that it signified a significant achievement for CMS.
Moreover, about 55% of Medicare enrollees—roughly 35 million people—choose private Medicare Advantage plans, which provide benefits that traditional Medicare does not cover, including dental and hearing aids. For many, these plans can be more economical than obtaining supplemental insurance to fill gaps in traditional Medicare.
However, the value of Medicare Advantage for taxpayers remains a contentious issue. Industry counterclaims that government inquiries often exaggerate patients’ conditions to inflate payments. Medicare compensates plans at higher rates for sicker patients, but providers must only bill for adequately documented symptoms.
Researchers have also indicated that Medicare loses billions annually due to overpayments, stemming from deficiencies in medical coding that lead to inflated claims.
Whistleblower lawsuits, typically initiated by former employees of healthcare organizations, have been crucial for recovering alleged overpayments. For instance, Kaiser Permanente recently agreed to a record $556 million payment resulting from Justice Department allegations of billing for non-existent medical conditions. They opted to settle to avoid the complexities of prolonged litigation.
In contrast, CMS’s attempts to mitigate overbilling in Medicare Advantage plans have frequently fallen short. Back in 2014, the agency retracted proposed rules aimed at curbing overbilling following significant industry pushback. Even subsequent audits that identified millions in overpayments resulted in limited recovery efforts.
CMS’s warning to Elevance about barring new memberships could signal new enforcement strategies. Matthew Fiedler, a health policy researcher, mentioned that while the payment is significant, it’s merely a small fraction of what Elevance receives from Medicare. He argued that ongoing collection of similar payments across all Medicare Advantage insurers is essential to genuinely tackle the issue of overpayments.
Former federal health policy expert Richard Kronick agreed, stating that although the payment represents a small segment of revenue, it nonetheless necessitates a considerable financial outlay from Elevance. He reflected that this might indicate a tougher stance from CMS.
CMS did not respond to inquiries regarding whether this payment would resolve the threat of denying Elevance new enrollments. If that’s the case, it may prove to be a financially strategic move. In a filing with the Securities and Exchange Commission, Elevance disclosed that its “best current estimate” of potential liabilities in this situation is about $935 million.
Elevance has been in conflict with the federal government over its billing practices since 2020, when a False Claims Act complaint was launched against the company, previously known as Anthem. That case is still ongoing.
Documented court filings have revealed that Elevance made the wire transfer of $342,209,085.30 to CMS on May 27, asserting that the payment relates to the potential enrollment ban. The company has disputed CMS’s actions, labeling them as “unprecedented” and insists there has been no wrongdoing, pointing out that CMS was aware of these billing practices for many years.
Myers noted that CMS’s ability to recover funds from Elevance might stimulate further enforcement actions, although he remarked on whether this signals a significant change remains unconfirmed.
