HOW PRIVATE EQUITY GETS ITS CUT FROM MEDICARE ADVANTAGE

The report examines how private equity firms capitalize on the growth of Medicare Advantage, particularly through insurance brokerage, marketing, and in-home health assessment companies. It highlights a surge in deal activity peaking in 2021, coinciding with regulatory rollbacks, and details risks such as dividend recapitalizations and False Claims Act violations. The author calls for stricter antitrust enforcement and joint liability for private equity owners to protect the Medicare program.

• Private equity investment in the Medicare Advantage sector saw a significant peak in 2021, with a subsequent decline in 2022 and 2023. The report attributes the 2021 high to "industry-friendly regulatory rollbacks for Medicare Advantage marketing" under the Trump administration, while the recent slowdown is likely due to "rising interest rates and the changing regulatory landscape."
• The majority of private equity deal activity in the Medicare Advantage ecosystem has focused on the senior insurance distribution market. Between 2019 and 2021, 57 percent of the 49 identified deals involved "insurance brokerage and marketing companies."
• Private equity firms utilize specific financial strategies in the healthcare sector that the report identifies as risky, including "dividend recapitalizations," where debt is added to a portfolio company to pay shareholders. The report notes that such practices can lead to "cost-cutting to meet their debt obligations, often at the expense of patients and workers."
• The report identifies a systemic issue of "Medicare overpayments" costing taxpayers billions annually, partly driven by "upcoding" where insurers use in-home health assessment companies to add diagnostic codes to records to increase payments. It notes that some private equity-owned companies have been involved in "False Claims Act settlements" related to these practices.
• The report highlights specific companies as examples of these trends: Medical Card System (MCS) settled for $4.2 million over alleged violations of the False Claims Act and Anti-Kickback Statute; Aveta, Inc. was subject to a whistleblower lawsuit alleging overcharges of "$300 and $350 million per year from 2007 through 2010"; and Integrity Marketing Group has engaged in aggressive consolidation with 28 add-on acquisitions of agencies selling Medicare Advantage plans since 2016.
• The Biden administration has implemented several regulatory changes to curb abuses, including requiring "CMS review of all prospective television advertisements" and updating the audit process for risk adjustment payments. However, the report warns these are "tied to CMS rule changes" and could be rolled back by future administrations.

APA

Bugbee, M. (2024). HOW PRIVATE EQUITY GETS ITS CUT FROM MEDICARE ADVANTAGE. Private Equity Stakeholder Project. https://pestakeholder.org/wp-content/uploads/2024/02/PESP_Report_Medicare_Advantage_Feb2024.pdf

Chicago

Bugbee, Mary. HOW PRIVATE EQUITY GETS ITS CUT FROM MEDICARE ADVANTAGE. Private Equity Stakeholder Project, 2024. https://pestakeholder.org/wp-content/uploads/2024/02/PESP_Report_Medicare_Advantage_Feb2024.pdf.

Wikipedia

{{cite report |last1=Bugbee |first1=Mary |title=HOW PRIVATE EQUITY GETS ITS CUT FROM MEDICARE ADVANTAGE |publisher=Private Equity Stakeholder Project |date=January 2024 |url=https://pestakeholder.org/wp-content/uploads/2024/02/PESP_Report_Medicare_Advantage_Feb2024.pdf |access-date=23 October 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{bugbee2024how, author = {Bugbee, Mary}, title = {{HOW PRIVATE EQUITY GETS ITS CUT FROM MEDICARE ADVANTAGE}}, institution = {Private Equity Stakeholder Project}, year = {2024}, month = jan, url = {https://pestakeholder.org/wp-content/uploads/2024/02/PESP_Report_Medicare_Advantage_Feb2024.pdf}, urldate = {2026-10-23}, note = {Indexed by Climate Insights Directory} }