Humana Pays $90M To Settle Whistleblower Allegations Of Medicare Part D Fraud

An article from

Dive Brief:

• Humana has agreed to pay $90 million to settle a whistleblower lawsuit accusing the health insurer of fraud in Medicare’s prescription drug benefit.
• The suit filed by one of Humana’s former actuaries alleges the company submitted fraudulent bids to the CMS for lucrative Part D contracts from 2011 to 2017, overcharging the government for medication.
• It’s the first settlement to resolve fraud allegations in Medicare’s prescription drug contracting process, according to Phillips and Cohen, the law firm representing the whistleblower. Humana denies the allegations.

Dive Insight:

The government contracts with private health insurers to administer the Part D benefit, which offers prescription drug coverage for more than 54 million Americans on Medicare.

By law, insurers must offer plans that cover a minimum required amount of drug costs. When plans submit annual bids to the CMS to participate in Part D, they have to report their proposed benefits and confirm that those benefits meet Part D’s minimum standard.

Whistleblower Steven Scott filed the lawsuit in 2016 alleging that Humana was inflating its costs in order to get a higher paying contract from the government, though the insurer was providing below the required level of coverage. Humana pocketed the difference — which amounted to hundreds of millions of dollars — as profit, according to Scott’s suit, which was filed under the False Claims Act.

Scott also alleged that Humana maintained two sets of books to perpetuate the scheme, a practice that ended in 2017 once the government began investigating the case. The Department of Justice later declined to intervene.

Humana and Scott settled before the trial was scheduled to begin. Humana decided to settle — without admitting wrongdoing — to avoid the uncertainty and cost of a long jury trial, according to a spokesperson.

“Humana firmly believes that the actuarial assumptions in its prescription drug plan were reasonable and in full compliance with all laws and regulatory requirements, and that the plaintiff’s claims in the case are without merit,” the spokesperson told Healthcare Dive over email.

Settlements and judgments under the False Claims Act reached record levels last year, with the majority of actions taking place in the healthcare industry, according to the DOJ.

Regulators say they are particularly concerned about rising fraud in Medicare as more seniors age into the taxpayer-funded health insurance program.