Aetna Agrees to $118 Million Settlement Over False Claims Act Allegations

Insurance giant Aetna has agreed to pay $118 million to settle allegations that it violated the False Claims Act by submitting inaccurate information to secure higher Medicare payments, federal officials announced Monday.

The settlement resolves claims that Aetna, one of the nation’s largest health insurers, manipulated patient diagnosis data submitted to the Centers for Medicare & Medicaid Services (CMS) between 2011 and 2015. The government alleged that Aetna’s actions led to inflated risk adjustment payments from Medicare Advantage programs.

“When healthcare companies prioritize profits over accuracy in their dealings with Medicare, they undermine the integrity of this essential program,” said Principal Deputy Assistant Attorney General Brian Boynton, head of the Justice Department’s Civil Division. “This settlement demonstrates our commitment to holding accountable those who knowingly submit inaccurate information to Medicare.”

According to investigators, Aetna conducted home visits for Medicare Advantage members, during which medical professionals would document patients’ health conditions. The government alleged that Aetna then used these visits to add diagnoses to patient records without properly verifying their validity or ensuring they reflected conditions that were actually treated during the coverage year, as required by Medicare regulations.

The Medicare Advantage program, also known as Medicare Part C, allows beneficiaries to enroll in private health insurance plans rather than traditional Medicare. The federal government pays these plans a set amount per enrollee, adjusted based on demographic factors and documented health conditions. This risk adjustment system provides higher payments for patients with more severe or chronic health issues.

“Medicare Advantage plans receive higher payments for treating patients with more serious conditions. This creates a financial incentive for plans to make patients appear sicker than they actually are,” explained U.S. Attorney Breon Peace for the Eastern District of New York. “Our office will continue to hold accountable those who manipulate this system.”

The allegations against Aetna were initially brought forward by whistleblowers under the qui tam provisions of the False Claims Act, which allows private citizens to file lawsuits on behalf of the government and share in any financial recovery. The whistleblowers in this case will receive approximately $21 million from the settlement proceeds.

This settlement marks another significant enforcement action in the healthcare industry, where the Justice Department has increasingly focused on Medicare Advantage fraud in recent years. Several major insurers, including UnitedHealth Group and Humana, have faced similar allegations of diagnosis manipulation to increase risk adjustment payments.

Industry analysts note that the settlement comes at a time of growing scrutiny for the Medicare Advantage program, which now enrolls nearly half of all Medicare beneficiaries. Critics argue that the current risk adjustment system creates perverse incentives for insurers to exaggerate patient illnesses, while supporters maintain that the program provides valuable care coordination for seniors with complex health needs.

“This $118 million settlement sends a clear message about the government’s focus on program integrity in Medicare Advantage,” said healthcare policy expert Jennifer Wilson from the Center for Health Policy Research. “As enrollment in these plans continues to grow, we can expect regulators to keep a close eye on how insurers document and report patient diagnoses.”

Aetna, which was acquired by CVS Health in 2018 for $69 billion, did not admit wrongdoing as part of the settlement. In a statement, the company said it agreed to the settlement “to avoid the uncertainty and expense of protracted litigation” and emphasized its commitment to compliance with Medicare regulations.

The settlement also includes a corporate integrity agreement that requires Aetna to implement enhanced compliance measures and submit to monitoring by the Department of Health and Human Services’ Office of Inspector General for the next five years.

Healthcare compliance experts suggest that this case highlights the complex challenges insurers face in the Medicare Advantage program, where documentation practices must balance thorough patient assessment with regulatory accuracy requirements.

The Justice Department indicated that combating healthcare fraud remains a top priority, particularly in government programs like Medicare that serve vulnerable populations and represent significant taxpayer expenditures.