Aetna, the health insurance subsidiary of CVS Health, has agreed to pay $117.7 million to resolve allegations that it knowingly submitted inaccurate diagnosis codes to the Centers for Medicare & Medicaid Services (CMS) in an effort to inflate payments under the Medicare Advantage program, the Department of Justice announced Wednesday.
The settlement resolves a False Claims Act investigation that alleged Aetna submitted, and failed to withdraw, untruthful diagnosis codes for its Medicare Advantage Plan enrollees. The government alleged these inaccuracies were intended to increase the risk adjustment payments Aetna received from Medicare, which are higher for beneficiaries with more complex health conditions. Specifically, the Justice Department alleged Aetna claimed patients suffered from morbid obesity despite BMI records that were inconsistent with such a diagnosis.
“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.”
The Medicare Advantage program, also known as Medicare Part C, allows beneficiaries to opt out of traditional Medicare and enroll in private health plans offered by insurance companies. CMS pays these Medicare Advantage Organizations (MAOs) a fixed monthly amount adjusted for risk factors related to expected health expenditures. The risk adjustment process relies on diagnosis codes submitted by the MAOs.
The Department of Justice’s investigation revealed that Aetna operated a chart review program as early as 2015, in which coders were paid to review medical records and identify additional conditions that could be used to increase members’ risk scores. According to the DOJ, some of these codes lacked supporting medical documentation. Aetna did not delete or withdraw these codes, which would have required repayment to CMS.
CVS Health, which acquired Aetna in 2018, stated it did not admit liability and agreed to the settlement to avoid the expense of protracted litigation. The alleged fraudulent activity occurred between 2018 and 2023, according to the Justice Department. The settlement resolves claims brought by the United States.
The investigation was triggered by a whistleblower lawsuit, the details of which were not disclosed by the Department of Justice. The government’s investigation focused on the accuracy of diagnosis codes related to conditions like morbid obesity, but the scope of the alleged inaccuracies may have extended to other diagnoses.
CMS has not yet commented on whether it will conduct a broader review of risk adjustment practices among other Medicare Advantage plans. The agency is currently facing increasing scrutiny over concerns about upcoding and overpayments within the Medicare Advantage program.
