HHS-OIG Issues Special Fraud Alert Focusing on MAO, Physician, and Broker Referral Arrangements

Over the past 30 years, HHS-OIG has issued almost 20 so-called “special fraud alerts.” As the agency explained back in 1994, these alerts (i) are based on a variety of sources, (ii) address specific trends and practices of particular concern to the agency, and (iii) are “intended for extensive distribution directly to the health care provider community.”

As we’ve discussed here and here, the significant growth of the Medicare Advantage (MA) program over the past decade has resulted in a corresponding increase in law enforcement (and whistleblower) attention and activity. As part of this trend, on December 11, 2024, HHS-OIG published a new special fraud alert entitled, Suspect Payments in Marketing Arrangements Related to Medicare Advantage and Providers. The alert—which references DOJ settlements in 2022 and 2024, as well as a host of third party reports, studies, and articles—focuses on two related risk areas, both of which concern the steering of Medicare beneficiaries:

• MAO Payments to Providers. First, according to the alert, certain MAOs have provided remuneration (e.g., “gift cards” and other “in-kind payments”) to health care professionals (Providers) and their staff “in exchange for those [Providers] or their staff referring or recommending individuals for enrollment in a particular MA plan.” CMS regulations allow Providers to engage in certain limited marketing or communications-related functions on behalf of an MAO. However, MAOs also must ensure that Providers acting on their behalf do not “[a]ccept compensation from the MA organization for any marketing or enrollment activities performed on behalf of the MA organization.”

• Provider Payments to Brokers. Second, certain Providers (or entities that contract with or employ Providers) have made payments to brokers, agents, and similarly situated individuals and entities (collectively, brokers) “to recommend that [Provider] to a particular MA enrollee or to refer the enrollee to the [Provider].” According to HHS-OIG, one motivation for this is so that the Provider will be “designated as the primary care provider for the enrollee at their particular MA plan, which can carry a substantial financial benefit for the [Provider].”

Patient Harm, Unfair Competition, and the Legal Authorities

According to the alert, these referral arrangements can harm patients and others.

• For example, where a Provider improperly steers a beneficiary to a new MA plan, the beneficiary may be “unable to access [his or her] preferred [Providers]” and “have higher out-of-pocket costs.”

• Similarly, where a broker improperly steers a beneficiary to a particular Provider, that Provider may “provide[] low-quality care” or may otherwise not be “the most appropriate for [the beneficiary’s] medical needs.”

• In addition to harming patients, improper referral arrangements may result in “unfair competition” by encouraging Providers and brokers to “direct enrollees to larger MAOs or certain [Providers] that can afford to make such payments, when smaller MAOs or other [Providers] may be more appropriate for an enrollee but may not have the resources to pay these improper amounts.”

According to HHS-OIG, in addition to causing harm, these arrangements may violate a variety of different laws, including CMS’ MA program regulations, the AKS, the CMP and exclusion authorities, and the FCA.

Suspect Characteristics

The alert concludes by providing the following laundry list of “suspect characteristics” that “taken together or separately, could suggest that an arrangement presents a heightened risk of fraud and abuse” and “could implicate the various fraud and abuse laws cited above”:

• The arrangement involves offering or paying Providers (or their staff) “remuneration” that:
  • is “in exchange for referring or recommending patients to a particular MAO or MA plan”;
  • is “disguised as payment for legitimate services but is actually intended to be payment for the [Provider’s] referral of individuals to a particular MA plan”;
  • is “in exchange for sharing patient information that may be used by the MAOs to market to potential enrollees”;
  • is “contingent upon or varies based on the demographics or health status of individuals enrolled or referred for enrollment in an MA plan”; or
  • “varies based on the number of individuals referred for enrollment in an MA plan.”

• The arrangement involves Providers offering or paying brokers “remuneration” that:
  • is in exchange for the broker “recommend[ing] that [Provider] to a Medicare enrollee or refer[ring] an enrollee to the [Provider]”;
  • “varies with the number of individuals referred to the [Provider]”; or
  • is “contingent upon or varies based on the demographics or health status of individuals enrolled or referred for enrollment in an MA plan.”

Conclusion

As with the other special fraud alerts, HHS-OIG’s most recent alert does not, and is not intended to, break new ground. Payment arrangements between and among MAOs, physicians, and brokers relating to beneficiary enrollment and assignment have been under investigation for several years now. Further, as with other special fraud alerts, the “suspect characteristics” identified by HHS-OIG may or may not be evidence of a violation of law. For example, many of the arrangements covered by these “suspect characteristics” may fit squarely into one or more AKS safe harbors, such as those covering employment arrangements,¹ personal services arrangements,² arrangements downstream of a fully-capitated MA plan,³ and value-based arrangements.⁴

That said, the alert is important in two respects. First, it is further evidence that the MA program is, and for the foreseeable future will remain, a top health law enforcement priority of the federal government. Second, irrespective of whether all, some, or none of the arrangements highlighted in the alert do, in fact, violate the law, because HHS-OIG views them as “suspect,” they will continue to be the target of government investigations and, as such, any MAO, Provider, broker or other health care industry stakeholder who is a party to such (or similar) arrangements would be well-advised to vet those arrangements with experienced in-house or outside counsel.

1. 42 C.F.R. § 1001.952(i). ↩︎
2. 42 C.F.R. § 1001.952(d). ↩︎
3. 42 C.F.R. § 1001.952(t). ↩︎
4. 42 C.F.R. §§ 1001.952(ee)-(gg). ↩︎