Aetna to Pay $117.7 Million to Settle U.S. Allegations of Inflated Medicare Advantage Claims

Key Takeaways

• False Claims Act Settlement: Aetna agreed to pay $117.7 million to resolve allegations that inaccurate diagnosis codes inflated Medicare Advantage reimbursements.
• Risk Adjustment Under Scrutiny: Authorities alleged the insurer overstated patient conditions and failed to withdraw unsupported diagnoses submitted to CMS.
• Chart Review Program Concerns: The government alleged Aetna used chart reviews to identify diagnoses that increased payments while ignoring findings indicating overpayments.
• Morbid Obesity Coding Issues: Between 2018 and 2023, Aetna allegedly submitted or retained morbid obesity diagnosis codes for patients whose BMI records did not support the condition.
• Whistleblower Reward: A former Aetna coding auditor who filed the lawsuit will receive $2,012,500 from the settlement.

Deep Dive

Aetna has agreed to pay $117.7 million to resolve allegations that it improperly inflated payments from the federal government by submitting inaccurate diagnosis codes for certain Medicare Advantage enrollees, the U.S. Department of Justice announced Wednesday.

Federal authorities alleged that the national insurer violated the False Claims Act by submitting, or failing to withdraw, diagnosis codes that overstated the health risks of some beneficiaries enrolled in its Medicare Advantage plans. Those codes are used by the Centers for Medicare & Medicaid Services (CMS) to determine how much insurers are paid for covering beneficiaries under the program.

While the settlement resolves the government’s allegations, it does not constitute a determination of liability.

The case highlights the growing scrutiny around how insurers calculate risk scores in the rapidly expanding Medicare Advantage market, where federal payments are adjusted based on the health conditions reported for each enrollee.

“The government pays private insurers over $530 billion each year to care for Americans enrolled in Medicare Advantage,” said Brett A. Shumate, Assistant Attorney General for the Justice Department’s Civil Division. “We will continue to hold accountable insurers that knowingly submit inaccurate or unsupported diagnoses to improperly inflate reimbursement.”

Scrutiny Over Diagnosis Coding Practices

Medicare Advantage, also known as Medicare Part C, allows beneficiaries to enroll in private health plans instead of traditional Medicare. Under the program, CMS pays insurers a fixed monthly amount for each enrollee, adjusted based on risk factors derived from diagnosis codes submitted by insurers. Patients with more serious medical conditions typically result in higher payments to insurers.

According to the government, Aetna submitted diagnosis information that overstated the health status of some beneficiaries, which in turn increased the payments it received from CMS. Officials also alleged that the insurer failed to withdraw unsupported diagnoses and falsely certified that the data it submitted was accurate.

One area of focus was a “chart review” program Aetna operated for payment year 2015. In that program, coders reviewed patient medical records to identify diagnoses that might justify higher reimbursement levels.

But according to the government’s allegations, those reviews sometimes revealed that previously submitted diagnosis codes were not supported by the medical records. Rather than removing those codes and returning any resulting overpayments, Aetna allegedly kept them in place while continuing to use the chart reviews to identify diagnoses that could increase payments.

Additional Allegations Over Morbid Obesity Coding

The settlement also addresses allegations that between 2018 and 2023 Aetna submitted, or failed to remove, inaccurate diagnosis codes for morbid obesity.

Authorities alleged that certain beneficiaries were coded as morbidly obese even though their medical records, including Body Mass Index (BMI) measurements, did not support that classification. Because morbid obesity is considered a high-risk condition under the Medicare Advantage payment model, such coding could increase reimbursement levels from CMS.

The government contends that these inaccurate codes led to inflated payments to the insurer.

Whistleblower Case Played Key Role

The lawsuit was filed by Mary Melette Thomas, a former Aetna risk-adjustment coding auditor. Under the settlement, she will receive $2,012,500 as her share of the recovery.

U.S. Attorney David Metcalf for the Eastern District of Pennsylvania said the case shows the government’s focus on protecting public healthcare funds.

“The government pays Medicare Advantage Organizations to facilitate vital healthcare to our seniors and other vulnerable citizens,” Metcalf said. “When corporations or individuals threaten the Medicare Advantage program by diverting those limited government resources through fraud, waste, or abuse, we will continue to pursue all available remedies.”

Federal health oversight officials echoed that, emphasizing the importance of accurate reporting in the program.

“Medicare Advantage relies on accurate reporting and attempts to manipulate the system undermine both the program’s integrity and the beneficiaries it serves,” said Scott J. Lampert, Acting Deputy Inspector General for Investigations at the Department of Health and Human Services Office of Inspector General.

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