$117.7 Million: How Aetna Allegedly Used One-Way Chart Reviews to Inflate Medicare Payments

Aetna Inc., a national health insurer incorporated in Pennsylvania, has agreed to pay $117,700,000 to resolve allegations that it violated the False Claims Act by submitting, and failing to withdraw, inaccurate diagnosis codes for its Medicare Advantage enrollees in order to inflate the payments it received from Medicare.DOCUMENTED

Under the Medicare Advantage program, also called Medicare Part C, beneficiaries can opt out of traditional Medicare and enroll in private health plans offered by insurers known as Medicare Advantage Organizations, or MAOs. The Centers for Medicare & Medicaid Services pays MAOs a fixed monthly amount per enrollee, adjusted upward for risk factors expected to raise a beneficiary's health costs — meaning insurers are paid more for sicker patients.DOCUMENTED

The "chart review" allegations

CMS collects diagnosis codes from MAOs to calculate these risk-adjusted payments. According to the government, for payment year 2015 Aetna operated a chart-review program in which it paid diagnosis coders to review patients' medical records — "charts" — and identify every medical condition those charts could support.DOCUMENTED

The government alleges Aetna used the results of those reviews selectively: when a chart review turned up a previously unreported diagnosis code that would increase Aetna's payment from CMS, Aetna submitted it. But when a chart review failed to substantiate a diagnosis code Aetna had already reported — meaning Aetna had been overpaid and was obligated to refund CMS — the company did not delete or withdraw the code, and did not return the money.DOCUMENTED The United States contends Aetna in effect ran a one-directional audit: mining the same review process for revenue while ignoring what it revealed about overpayment.REVIEWED

The morbid-obesity allegations

The settlement separately resolves allegations that, for payment years 2018 through 2023, Aetna knowingly submitted, or failed to withdraw, inaccurate diagnosis codes for morbid obesity to increase its CMS payments for beneficiaries enrolled in its Medicare Advantage plans.DOCUMENTED Medical records for patients diagnosed as morbidly obese typically include one or more Body Mass Index measurements. According to the government, Aetna submitted or retained morbid-obesity diagnosis codes for individuals whose recorded BMI was inconsistent with that diagnosis — codes that nonetheless increased the payments CMS made to Aetna.DOCUMENTED

That portion of the settlement traces to a qui tam lawsuit filed by a former Aetna risk-adjustment coding auditor, captioned United States ex rel. Mary Melette Thomas v. Aetna Inc., et al., in the U.S. District Court for the Eastern District of Pennsylvania. Under the False Claims Act's whistleblower provisions, the relator will receive a $2,012,500 share of the settlement.DOCUMENTED

Officials' statements

"The government pays private insurers over $530 billion each year to care for Americans enrolled in Medicare Advantage," said Assistant Attorney General Brett A. Shumate of the Justice Department's Civil Division. "We will continue to hold accountable insurers that knowingly submit inaccurate or unsupported diagnoses to improperly inflate reimbursement."DOCUMENTED

"The government pays Medicare Advantage Organizations to facilitate vital healthcare to our seniors and other vulnerable citizens," said U.S. Attorney David Metcalf for the Eastern District of Pennsylvania. "When corporations or individuals threaten the Medicare Advantage program by diverting those limited government resources through fraud, waste, or abuse, we will continue to pursue all available remedies against them."DOCUMENTED

Acting Deputy Inspector General for Investigations Scott J. Lampert of HHS-OIG said the settlement "makes clear that no company is beyond accountability, no matter how large or well known," adding that "those who seek to exploit Medicare Advantage should expect to be identified and held responsible."DOCUMENTED

According to the government, Aetna's own chart reviews surfaced both underpayment and overpayment signals — but only the underpayment signals were acted on.

Why risk-adjustment cases keep recurring

Aetna's settlement fits a pattern of False Claims Act cases against Medicare Advantage insurers built around the same basic mechanism: risk-adjustment payments that rise with the number and severity of diagnosis codes on file for a beneficiary, creating a financial incentive to maximize coded diagnoses regardless of whether the underlying medical evidence supports them.REVIEWED Because CMS relies on the insurers themselves to self-report and, where necessary, self-correct these diagnosis codes, cases like this one hinge on internal records — chart reviews, audit findings, and coding logs — that show a company knew a code was unsupported and chose action or inaction based on which direction the money would flow.REVIEWED

The resolution was the product of a coordinated effort between the Justice Department's Civil Division, Commercial Litigation Branch, Fraud Section, and the U.S. Attorney's Office for the Eastern District of Pennsylvania, working with HHS-OIG.DOCUMENTED The Justice Department noted that tips about potential health care fraud, waste or abuse can be reported to HHS-OIG at oig.hhs.gov/fraud/report-fraud or by calling 800-HHS-TIPS.DOCUMENTED

The scale of Medicare Advantage

Medicare Advantage has grown to cover more than half of all Medicare beneficiaries nationwide, and the risk-adjustment payment model at the center of this case is the same basic mechanism used across the entire program: CMS pays participating insurers a base rate per enrollee, then adjusts that rate up or down according to the diagnosis codes on file, which are meant to reflect each beneficiary's actual expected health costs.REVIEWED Because the insurer itself both treats patients (or contracts with providers who do) and reports the diagnosis codes used to set its own payment, the program depends heavily on insurers accurately and evenhandedly reporting what their own reviews and audits actually find — including when those findings point toward an overpayment rather than an underpayment.REVIEWED

The Aetna settlement is one of a series of False Claims Act resolutions the Justice Department has pursued against Medicare Advantage insurers over risk-adjustment practices in recent years, reflecting sustained scrutiny of how the largest MAOs code and audit diagnosis data used to calculate hundreds of billions of dollars in annual federal payments.REVIEWED For beneficiaries and the public, the practical stakes are less about any single settlement and more about whether the underlying incentive structure — payment tied to diagnosis volume and severity — continues to reward insurers for finding new codes to add while discouraging them from correcting codes that no longer hold up.REVIEWED

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