Aetna Inc. has agreed to a $117.7 million settlement to resolve claims that it pumped up its Medicare Advantage payments using untruthful patient data, the Department of Justice announced today. The Pennsylvania-based insurer faced allegations that it gamed the “risk adjustment” system, a process where the government pays private insurers more money for covering sicker patients.
By submitting or failing to pull back inaccurate diagnosis codes, federal investigators say Aetna pulled in millions of taxpayer dollars it wasn’t actually entitled to.
Under Medicare Part C, private companies like Aetna get a fixed monthly fee per person. To keep things fair, the Centers for Medicare & Medicaid Services (CMS) pays extra for people with serious health issues, relying on the insurers to report those diagnoses honestly.
However, the government alleges Aetna played it both ways. During a 2015 “chart review” program, the company hired coders to hunt for new medical conditions that would trigger higher payments. But when those same reviews proved that previously reported illnesses didn’t actually exist, Aetna allegedly stayed silent and kept the money instead of paying CMS back.
The settlement also settles claims that between 2018 and 2023, Aetna knowingly used “morbid obesity” codes to hike its reimbursements, even when patient records showed a Body Mass Index (BMI) that didn’t fit the diagnosis.
“We will continue to hold accountable insurers that knowingly submit inaccurate or unsupported diagnoses to improperly inflate reimbursement,” said Assistant Attorney General Brett A. Shumate. U.S. Attorney David Metcalf added that when corporations divert limited government resources through fraud or waste, his office will pursue “all available remedies.”
This massive payout was triggered in part by Mary Melette Thomas, a former Aetna coding auditor who blew the whistle on the company’s practices. Under the False Claims Act, private citizens can sue on behalf of the government and share in the recovery.
For her role in exposing the morbid obesity billing issues, Thomas will receive just over $2 million of the settlement.
While the settlement ends the legal battle, it serves as a stern warning from the HHS-OIG, with Acting Deputy Inspector General Scott J. Lampert noting that “no company is beyond accountability, no matter how large or well known.”
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