Oak Street Health, a wholly-owned subsidiary of CVS Health since 2023, has agreed to pay $60 million to resolve allegations that it violated the False Claims Act (FCA) by paying kickbacks to third party insurance agents in exchange for their recruiting of seniors to Oak Street Health’s primary care clinics.
The United States alleged that prior to CVS’ ownership, in 2020, Oak Street Health developed a program to increase membership – the Client Awareness Program. Under the Program, at the direction of Oak Street Health, third-party insurance agents would contact seniors who were eligible for (or already enrolled in) Medicare Advantage and then delivered marketing messages to them that were designed to create interest in Oak Street Health. Agents would then refer interested seniors to an Oak Street Health employee through a three-way phone call or an electronic submission.
Oak Street would typically pay agents $200 per beneficiary referred or recommended to the company, incentivizing the agents to make referrals and recommendations to Medicare beneficiaries based on financial motivations for themselves – not the best interest of the senior patients.
According to the government, thousands of Medicare beneficiaries and a small number of Illinois Medicaid beneficiaries received Government-reimbursed care at Oak Street Health, as a result of the Client Awareness Program.
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 as detailed above. The DOJ notes that these claims are in violation of the False Claims Act because a Medicare beneficiary was referred or recommended to Oak Street Health under an illegal kickback scheme and they signed up for a capitated arrangement with Oak Street Health under Medicare Part C. Oak Street Health also submitted false claims directly to the Federal Government when a beneficiary received care at Oak Street Health under Medicare Part B.
Of the $60 million settlement, $30 million is restitution. The bulk of the settlement is considered the Federal Settlement Amount while only $69,557.76 is the state portion.
The claims were originally brought under the qui tam provisions of the False Claim Act by a whistleblower, who will receive $9.9 million for his actions. As we often see, Oak Street Health did not admit to any wrongdoing, nor is the settlement any indication that the claims of the United States and the State of Illinois are not well-founded.
“Health care providers that attempt to profit from kickbacks will be held accountable,” said Principal Deputy Assistant Attorney General Brian M. Boynton, head of the Justice Department’s Civil Division. “We are committed to rooting out illegal practices committed by Medicare Advantage providers, insurance agents and brokers that undermine the interests of federal health care programs and the patients they serve.”