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Federal health insurer Aetna has agreed to pay $118 million to settle allegations that it manipulated diagnosis codes to boost Medicare Advantage payments, the Justice Department announced Thursday.
The settlement resolves claims that Aetna, a CVS Health subsidiary, submitted inaccurate diagnosis codes for its Medicare Advantage enrollees between 2013 and 2019, artificially inflating payments received from the federal government.
According to prosecutors, Aetna conducted retrospective reviews of medical records to identify additional diagnosis codes that could increase its Medicare Advantage reimbursements. However, the company allegedly failed to look for and delete unsupported diagnosis codes with similar diligence, leading to inflated payment claims.
“When insurance companies participate in Medicare Advantage, they must ensure they submit accurate information about patients’ medical conditions,” Principal Deputy Assistant Attorney General Brian Boynton said in a statement. “We are committed to holding accountable those who knowingly submit or cause the submission of false claims to government healthcare programs.”
The settlement adds to a growing list of legal actions against major insurers over Medicare Advantage coding practices. In recent years, the Justice Department has intensified scrutiny of Medicare Advantage organizations, with similar lawsuits filed against UnitedHealth Group, Elevance Health, and other industry giants.
Medicare Advantage, the privatized alternative to traditional Medicare, has grown dramatically over the past decade and now covers more than 30 million seniors and people with disabilities—roughly half of all Medicare beneficiaries. Under the program’s risk-adjustment payment model, insurers receive higher reimbursements for members with documented chronic conditions.
Industry analysts say this payment structure has created incentives for insurers to aggressively document diagnoses, sometimes leading to practices that regulators view as abusive.
“This settlement highlights the ongoing tension between insurers trying to maximize legitimate reimbursements and regulators concerned about potential gaming of the system,” said Michael Abrams, managing partner at healthcare consultancy Numerof & Associates. “It’s a particularly significant issue as Medicare Advantage enrollment continues to surge.”
The settlement also requires Aetna to enter into a five-year corporate integrity agreement with the Department of Health and Human Services Office of Inspector General. This agreement mandates enhanced compliance measures, including independent review of the company’s Medicare Advantage risk adjustment practices.
CVS Health, which acquired Aetna in a $69 billion deal in 2018, said the settlement resolves an investigation that began before the acquisition. In a statement, the company emphasized its commitment to regulatory compliance while noting the settlement includes no admission of wrongdoing.
“We are pleased to resolve this matter so we can focus on delivering superior health outcomes for the millions of Americans who choose Aetna’s Medicare Advantage plans,” a CVS Health spokesperson said.
The Medicare Advantage program has come under increasing scrutiny from federal watchdogs beyond just upcoding concerns. A series of reports from the HHS Inspector General have identified issues with prior authorization delays and inappropriate care denials. Meanwhile, the Medicare Payment Advisory Commission has repeatedly questioned whether the program provides value for taxpayer dollars.
Despite the regulatory challenges, Medicare Advantage continues to attract new enrollees, drawn by supplemental benefits like dental, vision, and fitness programs not available in traditional Medicare.
For insurers, the settlement serves as a reminder of the compliance risks inherent in the program, especially as the Biden administration has signaled continued enforcement around Medicare Advantage billing practices.
“This settlement represents about one percent of Aetna’s annual Medicare Advantage revenue, so while significant, it won’t fundamentally change business models,” said Ari Gottlieb, a healthcare industry consultant. “But it does reinforce that the Justice Department remains focused on what it sees as abusive coding practices across the industry.”
The $118 million Aetna settlement follows similar agreements with other insurers, including a $90 million settlement with Kaiser Permanente last year and a $575 million settlement with UnitedHealth in 2023.
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14 Comments
It’s disheartening to see another major healthcare provider caught gaming the Medicare Advantage system. Aetna’s actions undermine the integrity of the program and shortchange taxpayers. I hope this settlement leads to greater scrutiny of Medicare Advantage plans and stronger measures to prevent future instances of fraud and abuse.
Agreed. While this settlement is a positive step, the broader challenge of Medicare Advantage upcoding and improper risk adjustment is far from resolved. Ongoing monitoring and enforcement will be critical to ensuring these taxpayer-funded programs operate with transparency and integrity.
Upcoding and gaming of Medicare reimbursements is an age-old problem, but it’s disheartening to see a major player like Aetna engaging in it. As a subsidiary of CVS Health, they should be held to the highest standards of ethical behavior. This settlement highlights the need for continued scrutiny of Medicare Advantage plans.
Absolutely. Given the size and influence of CVS Health, one would hope they would set a better example for the industry. This lapse in integrity is concerning and underscores the importance of ongoing government oversight to protect the integrity of Medicare programs.
It’s good to see the Justice Department taking action against this type of abuse. Medicare Advantage plans have become an increasingly important part of the US healthcare system, so it’s crucial that they operate with transparency and integrity. Providers need to be held accountable when they put profits ahead of patient care.
Absolutely. The growing prevalence of Medicare Advantage makes it all the more important that the government vigilantly monitors for fraud and misuse of public funds. This settlement sends a strong message that such behavior will not be tolerated.
This is a concerning case that highlights the need for tighter controls and oversight in the Medicare Advantage program. Insurers like Aetna should be held to the highest standards of ethical behavior when it comes to managing public healthcare funds. I hope this settlement serves as a wake-up call for the industry to clean up its act.
Absolutely. The scale of the alleged fraud here is quite troubling, and it’s disappointing to see a major player like Aetna engaged in these kinds of practices. Robust auditing and enforcement will be essential to rooting out this type of behavior and ensuring the integrity of the Medicare Advantage program.
This appears to be yet another case of a major healthcare provider exploiting Medicare Advantage for financial gain. Upcoding diagnosis codes to boost reimbursements is unethical and deprives the Medicare system of critical funding. Strict oversight and severe penalties are needed to deter this kind of behavior.
I agree, the scale of this alleged fraud is quite concerning. $118 million is a significant sum, and it’s troubling to see Aetna conducting retrospective reviews to identify additional diagnoses solely for the purpose of inflating payments.
This is an important settlement that sends a clear message about the consequences of fraudulent billing practices in the Medicare Advantage program. Aetna should be commended for taking responsibility and reaching an agreement, though the underlying issues of upcoding and improper risk adjustment remain a significant challenge across the industry.
You make a good point. While this settlement is a positive step, the broader problem of Medicare Advantage plans exploiting the system for profit continues to be an area of major concern. Ongoing vigilance and stronger regulations will be needed to truly address these systemic issues.
This is an unfortunate but unfortunately common issue in the Medicare Advantage space. Insurers seem to frequently find ways to game the system and inflate their reimbursements, often at the expense of taxpayers. More robust auditing and penalties are clearly needed to deter this kind of behavior.
I agree, the pervasiveness of these types of schemes is really concerning. Medicare Advantage was meant to improve care for seniors, not serve as a vehicle for insurance companies to inflate their profits. Stronger oversight and enforcement will be key to restoring integrity to the program.