CVS’ Oak Street Health will pay $60 million to settle federal kickback allegations

Oak Street Health has agreed to pay $60 million to resolve alleged violations of the False Claims Act, the U.S. Department of Justice announced this week. The wholly owned subsidiary of CVS Health allegedly paid kickbacks to third-party insurance agents in exchange for recruiting seniors to Oak Street Health’s primary care clinics.

The Anti-Kickback Statute prohibits anyone from offering or paying, directly or indirectly, money or anything else of value to induce referrals of patients or to provide recommendations of items or services covered by Medicare, Medicaid and other federally funded programs.

The Justice Department alleged that in 2020, Oak Street Health developed a program to increase patient membership called the Client Awareness Program. Under the program, third-party insurance agents contacted seniors eligible for or enrolled in Medicare Advantage and delivered marketing messages designed to generate interest in Oak Street Health. Agents then referred interested seniors to an Oak Street Health employee through a three-way phone call, an electronic submission or both.

In exchange, Oak Street Health typically paid agents $200 for each beneficiary referred or recommended. These payments incentivized agents to base their referrals and recommendations on the financial motivations of Oak Street Health rather than the best interests of seniors, the Justice Department said.

“Health care providers that attempt to profit from kickbacks will be held accountable,” said Brian M. Boynton, principal deputy assistant attorney general and head of the 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.”

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Kickbacks impose hidden costs on the federal health care system and compromise medical choice and decision-making, said Mario Pinto of the Department of Health and Human Services Office of the Inspector General. “Working determinedly with our law enforcement partners, HHS-OIG will continue to protect the integrity of federal health care programs,” he said, “and we encourage the public to come forward with information about violative conduct.”

The allegations predate CVS’ acquisition of Oak Street, which closed in May 2023. CVS spokesperson Mike DeAngelis told Fierce Healthcare that the company cooperated closely with the investigation and denies any wrongdoing. “We are pleased to put this matter behind us so we can continue to focus on improving the quality of care for at-risk older adults,” he said.

The Justice Department noted that the claims resolved by the settlement are allegations only and there has been no determination of liability.