Aetna Inc, a nationwide healthcare insurer incorporated in Pennsylvania, has agreed to pay $117.7m to settle allegations that it violated the US False Claims Act by submitting, or failing to correct, inaccurate diagnosis codes for members enrolled in its Medicare advantage plans, thereby increasing the payments it received from the federal Medicare program.
According to the US government, Aetna submitted patient diagnosis information to the Centers for Medicare & Medicaid Services (CMS) that overstated the medical conditions of certain beneficiaries to increase the risk-adjusted payments it received.
The government further alleged that the company failed to withdraw unsupported diagnosis codes and return the resulting overpayments, while certifying to CMS that the submitted data was inaccurate.
The settlement resolves these allegations without a determination of liability.
“We will continue to hold accountable insurers that knowingly submit inaccurate or unsupported diagnoses to improperly inflate reimbursement,” commented Assistant Attorney General Brett A Shumate of the Justice Department’s Civil Division.
“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,” US Attorney David Metcalf for the Eastern District of Pennsylvania added.
“Medicare Advantage relies on accurate reporting, and attempts to manipulate the system undermine both the program’s integrity and the beneficiaries it serves,” announced Acting Deputy Inspector General for Investigations Scott J Lampert of the US Department of Health and Human Services, Office of Inspector General (HHS-OIG). “Today’s settlement makes clear that no company is beyond accountability, no matter how large or well known.”
Chart review practices under scrutiny
US authorities allege that Aetna used a retrospective “chart review” process to reassess medical records for Medicare Advantage beneficiaries and identify additional diagnoses that could justify higher risk-adjusted payments from the CMS.
Under the program, professional coders were engaged to examine patient records and determine whether they supported additional medical conditions that had not previously been reported.
According to the government’s allegations, Aetna relied on these reviews to submit new diagnosis codes that increased payments for certain beneficiaries. However, the same review process also indicated that some diagnosis codes previously submitted to CMS were not supported by the underlying medical records.
Federal prosecutors contend that Aetna did not consistently remove or correct those underreported codes, even though doing so would have required a company to return overpayments.
Medicare Advantage insurers operate under annual contracts with CMS and must certify that the diagnosis data they submit is accurate, complete, and truthful, as required by federal regulations and their contractual obligations.
Authorities allege that despite this requirement, Aetna continued to certify the accuracy of its submissions while failing to address diagnosis codes that its own chart reviews had not substantiated.
The settlement resolves these allegations related to the company’s reporting practices for the 2015 payment year.
Morbid obesity coding allegations
The settlement also resolves additional allegations that, between 2018 and 2023, Aetna submitted or failed to withdraw diagnosis codes for morbid obesity that were not supported by the medical records of certain Medicare advantage beneficiaries.
Under the program’s risk adjustment framework, specific diagnoses can increase the payments insurers receive from CMS, making the accuracy of diagnosis coding central to the calculation of federal reimbursements. US authorities allege that some beneficiaries were coded as suffering from morbid obesity even though their medical documentation, including recorded Body Mass Index (BMI) measurements, did not support such a classification.
In a number of instances, prosecutors contend that the highest recorded BMI for the beneficiary during the relevant service year was below levels typically associated with morbid obesity.
Nevertheless, the diagnosis codes were submitted to CMS or remained uncorrected, resulting in higher risk-adjusted payments.
The government further alleges that some of these diagnosis codes were introduced during retrospective chart reviews conducted by Aetna and its contractors, while in other cases the reviews revealed that diagnoses originally reported by healthcare providers were not supported by underlying medical records.
Despite these discrepancies, authorities claim that the codes were not consistently investigated or withdrawn. These allegations formed part of a whistleblower lawsuit brough under the False Claims Act by a former Aetna risk-adjustment coding auditor, who will receive approximately $2m from the settlement.
Healthcare data integrity
The Aetna settlement reflects a broader enforcement trend in which regulators are placing increasing emphasis on the accuracy and transmission of healthcare data within the Medicare Advantage system.
In announcing the resolution, the US Department of Justice underscored that the investigation illustrates the government’s continued focus on combatting healthcare fraud particularly where diagnosis coding and risk-adjustment payments are concerned.
Recent regulatory actions suggest that scrutiny now extends beyond the content of diagnosis codes to the technical and procedural integrity of data submissions themselves.
In February 2026, CMS notified Elevance Health that it could face sanctions, including suspension of Medicare Advantage plan enrollments, over alleged failures to comply with data submission requirements.
CMS contends that the insurer repeatedly transmitted risk-adjustment data through encrypted external flash drives rather than the agency’s approved electronic systems, despite multiple warnings.
Such cases highlight a regulatory environment in which insurers face heightened expectations around both the accuracy of clinical coding and the governance frameworks used to report and correct risk-adjustment data.