Insurer pays millions after allegations involving inaccurate Medicare diagnosis reporting.
Aetna Inc., one of the nation’s largest health insurance companies, has agreed to pay $117.7 million to settle federal allegations that it improperly increased payments it received through the Medicare Advantage program. Federal officials announced the agreement after investigators claimed the company submitted inaccurate diagnosis information connected to patients enrolled in its private Medicare plans. The settlement resolves claims brought under the False Claims Act, a law designed to prevent misuse of government funds.
Medicare Advantage, also called Medicare Part C, allows older adults and certain disabled individuals to receive Medicare benefits through private insurance companies instead of the traditional government-run system. Under this program, the federal government pays insurers a fixed monthly amount for each enrollee. Payment levels change depending on the health conditions reported for each patient. Individuals with more serious medical needs generally result in higher payments because they are expected to require more care.
Federal authorities alleged that Aetna reported diagnosis codes that made some patients appear sicker than medical records supported. Diagnosis codes are used to describe medical conditions and play a large role in determining how much insurers are paid. The government claimed that inaccurate coding increased the amount of money Aetna received from Medicare.
Investigators said the company either submitted incorrect diagnosis data or failed to remove codes that were later found to be unsupported. Officials also alleged that Aetna confirmed in writing that its submitted data was accurate even when certain diagnoses could not be verified. The settlement resolves these claims without a determination of liability, meaning the allegations were not proven in court.
Part of the case focused on a program run by Aetna during the 2015 payment year. According to federal officials, the company hired coders to review patient medical records, often called chart reviews, to identify health conditions that could justify higher payments. Authorities claimed the reviews were used to find diagnoses that increased reimbursement but were not consistently used to remove diagnoses that would have lowered payments. When unsupported codes remained in place, Medicare payments allegedly stayed higher than they should have been.
The government also raised concerns about diagnosis coding related to morbid obesity between payment years 2018 and 2023. Medical records tied to that diagnosis normally include body mass index measurements supporting the condition. Investigators alleged that Aetna submitted or kept diagnosis codes for morbid obesity even when recorded body mass index numbers did not match that level of illness. Because these codes affected payment calculations, officials said they increased federal spending.
The case included a whistleblower lawsuit filed by a former Aetna risk-adjustment coding auditor. Federal law allows private individuals to file claims on behalf of the government if fraud involving public funds is suspected. When settlements are reached, whistleblowers may receive a share of recovered money. In this case, the former employee will receive just over $2 million as part of the resolution.
Federal officials stated that the Medicare Advantage program now involves hundreds of billions of dollars in annual payments to private insurers. Authorities said accurate reporting is necessary to ensure taxpayer funds are spent correctly and that benefits remain available for seniors and other eligible patients. Government representatives emphasized that enforcement actions will continue when insurers submit unsupported or misleading information tied to payment requests.
The investigation involved cooperation between several federal offices, including the Justice Department’s Civil Division, attorneys from the Eastern District of Pennsylvania, and investigators from the Department of Health and Human Services Office of Inspector General. Officials described the case as part of ongoing efforts to address healthcare fraud and protect federal healthcare programs from waste or abuse.
The False Claims Act remains one of the government’s main legal tools for pursuing alleged fraud involving federal programs. The law allows both government investigators and private whistleblowers to bring claims when public funds may have been improperly obtained. Settlements often occur without admissions of wrongdoing, allowing disputes to be resolved while avoiding lengthy court proceedings.
Federal officials noted that the agreement settles allegations only and does not represent a finding that the company violated the law. Aetna’s payment closes the matter while reinforcing federal oversight of billing practices connected to large healthcare programs. The case reflects continued attention on how diagnosis reporting affects payments within Medicare Advantage and highlights the financial impact that coding practices can have on government healthcare spending.
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Aetna Agrees to Pay $117.7 Million to Resolve False Claims Act Allegations
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