In the midst of a billing investigation, Elevance Health pays the government $342 million

One of the nation’s largest Medicare Advantage firms has agreed to pay the government over $342 million to help resolve accusations it overcharged Medicare for years.

Elevance Health, which covers about 2 million people on Medicare, sent the money to the Centers for Medicare & Medicaid Services via wire transfer on May 27, court records show. Details of the payment were revealed in a court filing by government attorneys on June 22.

Elevance, which CMS sued in the case, said in an e-mail to CMS staff that the funds were a “remittance of the total overpayment amount” CMS estimated in its government audits. Elevance Health continues to engage in constructive dialogue with CMS, says company spokesperson Leslie Porras in a statement to KFF Health News. She said they are hopeful for a resolution and appreciate the long-term ties they have with CMS.

The payment is the result of a February CMS enforcement action in which the agency threatened to stop enrolling individuals in Elevance Medicare Advantage plans until it addressed “substantial and persistent noncompliance” with federal regulations mandating that plans return overpayments and submit accurate billing information when they are found.

The agency’s audits have identified for years that many Medicare Advantage health plans have been overbilling the program, but it seems to be the first time that officials have been able to get a health plan to pay back tens of millions of dollars of alleged overpayments.

“This is so new we’ve never heard of anything like this,” said David Lipschutz, an attorney at the Center for Medicare Advocacy, a nonprofit public interest law firm. “Usually, plans appear to tie up everything and attempt to put off any repayment of anything for several years.”

The payment is “substantial” and “a step in the right direction” in holding the industry accountable, said David Meyers, an associate professor at the Brown University School of Public Health.

The private Advantage health insurance plans are popular because they provide additional benefits which are not covered by traditional Medicare, such as coverage for hearing and dental services, and over 35 million Americans (approximately 55% of those on Medicare) have enrolled in these plans.

Patients may also find it to be an affordable option to join the plans, compared to buying supplemental insurance to bridge the coverage gap of traditional Medicare plans.

Whether Medicare Advantage is a good deal for taxpayers is hotly debated, however.

The industry disputes that the health plans have been the subject of dozens of whistleblower lawsuits and government investigations, which allege that they “overstate the severity of patients’ illnesses to inflate their payments. Medicare reimburses health plans for more severe patients, but also expects them to be reimbursed only for conditions appropriately documented in a patient’s medical records.

The researchers have also found that Medicare pays billions of dollars more each year to the health plans than they actually deserve, due to medical coding inaccuracies, which result in bills that are too high.

The whistleblower suits, which are typically brought by former workers for healthcare firms, have been the primary device for recouping alleged overpayments for a long time. In January, Kaiser Permanente reached a settlement of $556 million with the Justice Department for allegedly making claims for medical conditions that were not present, the largest settlement of its kind so far. It settled the case, the company said, “to forestall delay, uncertainty and expense in extended litigation, as outlined in a statement on its website.”

CMS, by contrast, has been largely unsuccessful in efforts to make sure Medicare Advantage plans don’t overcharge.

CMS, for example, has backed off from a proposed rule to crack down on over-billing in 2014 after receiving an “uproar” of opposition from the industry. Even when CMS discovered tens of millions of dollars in overpayments, agency officials took a small bite out of the pie.

Matthew Fiedler, health policy researcher at the Brookings Institution, said the payment Elevance is making here isn’t small potatoes.

However, it is a tiny percentage of the amount Medicare pays to the company altogether, he said. If CMS wanted to make a significant impact on the overpayment issue, he said, it has to “get many similar payments” from “every” Medicare Advantage insurer.

Richard Kronick, a former health policy official in the federal government and professor at the University of California-San Diego, said the payment is a “small percentage of the company’s revenues.” But he said it was “still a sizable check to write.”

CMS did not immediately respond to a request for comment. According to court records, it is uncertain if the payment will lift the CMS threat to end its enrollment of new members for Elevance.

If so, it may well be a relatively inexpensive choice. The company said in the filing with the Securities and Exchange Commission in April that the “potential exposure” in the case was approximate $935 million as of the end of the second quarter.

Since 2020, Elevance (previously Anthem) has been in dispute with the federal government regarding billing practices, with the Justice Department filing a False Claims Act lawsuit against the company. That’s a case currently pending.

Those filings in the case revealed the company’s payment to CMS. A company official confirmed in an email that they signed the wire transfer for $342,209,085.30 on May 27 and that it was connected to the threat of the enrollment ban. The company also said it was contending with the CMS enforcement action and decried it as “unprecedented.”

Elevance is denying that it is guilty of the misconduct in its defense against the Justice Department suit, claiming that CMS had been aware of the billing practices for years and had done nothing.

The U.S. Centers for Medicare and Medicaid Services’ success in collecting payment from Elevance may be a sign of more such enforcement, said Brown University professor Meyers.

Elevance has agreed to pay $342 million to resolve a U.S. government investigation into its billing practices. The settlement concludes allegations related to the submission of inaccurate diagnosis information that affected payments under Medicare Advantage programs. While the agreement resolves the civil investigation, it does not necessarily represent an admission of wrongdoing by Elevance.

The settlement reflects continued federal efforts to ensure that healthcare organizations maintain accurate billing records and comply with Medicare regulations.

Elevance Reaches Settlement with Federal Authorities

The investigation focused on whether Elevance submitted unsupported diagnosis codes that may have increased reimbursement from government-funded healthcare programs. Federal officials have placed greater emphasis on auditing Medicare Advantage billing in recent years, making compliance a top priority for insurers participating in these programs.