Medicare Advantage fraud allegations against Aetna settled for nearly $118M

Health insurance and managed care giant Aetna has agreed to pay $117.7 million to resolve allegations that it violated federal law by engaging in upcoding. Specifically, the company was accused of submitting false patient diagnoses to the Centers for Medicare & Medicaid Services (CMS) to boost payments it received as part of the Medicare Advantage program—also known as Medicare Part C.

The U.S. Department of Justice (DOJ) announced the settlement on Wednesday, which stems from incidents in 2015 where Aetna is accused of receiving more risk-adjusted payments than it was legally owed. Such payments are sent by CMS to offset the costs of managing care for patients with serious illnesses and chronic conditions, as an incentive for private companies to cover these individuals while ensuring that doing so remains profitable for the insurer. 

That year, the DOJ contends that Aetna “operated a ‘chart review’ program in which it paid diagnosis coders to review medical records.” The company allegedly paid these coders to review patient medical records and identify conditions patients may have. While this is a normal practice, prosecutors said many of the codes applied during the chart review process did not accurately match the conditions patients had. Instead, diagnoses were misrepresented to boost Medicare payouts. 

This was not the extent of the alleged fraud. The DOJ also claims that, between 2018 and 2023, the publicly traded insurance company also “knowingly submitted or failed to delete or withdraw inaccurate and untruthful diagnosis codes” wrongfully identifying its covered members as morbidly obese, which earned additional payouts from CMS due to the high-risk of serious health complications associated with this patient population. 

“The medical records for individuals diagnosed as morbidly obese typically include one or more Body Mass Index (BMI) recordings. Aetna submitted or failed to delete inaccurate and untruthful diagnosis codes for morbid obesity for individuals whose recorded BMI was inconsistent with a diagnosis of morbid obesity, and these codes increased the payments made by CMS,” the DOJ wrote. 

The settlement with the DOJ also resolved these allegations, the agency specified. The allegations around obesity upcoding were initially brought forward by a whistleblower in Pennsylvania, under provisions of the False Claims Act, which allows a private party to sue on behalf of the government when they believe fraud has occurred. 

If the lawsuit is successful, the whistleblower receives part of any judgment—including recovery payments that stem from settlements, such as in this case. 

“The settlement in this case provides for the whistleblower, a former Aetna risk-adjustment coding auditor, to receive a $2,012,500 share of the settlement amount,” the DOJ added.