Oak Street Health to Pay $60 Million to Settle Medicare Kickback Allegations

Oak Street Health agrees to pay $60 million to settle allegations of paying kickbacks to insurance agents.Photo byJack CohenonUnsplash

Oak Street Health, a subsidiary of CVS Health, has agreed to pay $60 million to settle allegations that it violated the False Claims Act by paying kickbacks to insurance agents in exchange for referring Medicare Advantage patients to its primary care clinics, the Department of Justice (DOJ) announced today.

According to the DOJ, from September 2020 to December 2022, Oak Street Health offered third-party insurance agents’ payments of up to $200 per patient referral as part of its Client Awareness Program.

These payments allegedly led to false claims being submitted to Medicare, in violation of the Anti-Kickback Statute.

“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.”

As part of the Client Awareness Program, insurance agents contacted seniors eligible for or enrolled in Medicare Advantage and delivered marketing messages promoting Oak Street Health.

Agents then referred interested seniors to Oak Street Health employees via a three-way phone call, known as a “warm transfer,” or through electronic submission. In return, Oak Street Health typically paid agents $200 per beneficiary referred.

These payments incentivized agents to make referrals based on Oak Street Health’s financial interests rather than the best interests of seniors, the DOJ alleged.

“Kickbacks, in any form, have no place in our federal healthcare system,” said Acting U.S. Attorney Morris Pasqual for the Northern District of Illinois.

“My office is alert for kickbacks that can subvert patient choice and defraud federal health care programs. This investigation and settlement help ensure that patient choice is prioritized above a provider’s bottom line.”

The settlement also includes a $9.9 million payment to whistleblower Joseph Stinson, who filed the initial qui tam lawsuit under the False Claims Act.

Notably, the claims resolved by the settlement are allegations only. There has been no determination of liability.