Aetna Agrees to Pay $117.7M to Resolve Medicare Advantage False Claims Allegations

March 18, 2026

Quick Summary

Aetna agreed to pay $117.7 million to resolve allegations it violated the False Claims Act involving Medicare Advantage payments.
The government claimed Aetna submitted inaccurate diagnosis codes that increased risk-adjusted reimbursements from Medicare.
Allegations included improper reporting of morbid obesity diagnoses and failure to withdraw unsupported diagnosis codes discovered during internal chart reviews.
The case highlights continued federal scrutiny of Medicare Advantage risk-adjustment practices.
Whistleblowers remain a key driver of enforcement actions in healthcare fraud cases.

Federal Scrutiny of Medicare Advantage Risk Adjustment

Aetna has agreed to pay $117.7 million to resolve allegations that it improperly inflated payments received through the Medicare Advantage program. The settlement, announced by the U.S. Department of Justice, resolves claims that the insurer violated the federal False Claims Act by submitting or failing to withdraw inaccurate diagnosis codes tied to beneficiaries enrolled in its Medicare Advantage plans.

Although Aetna denies wrongdoing and says the settlement avoids the cost and uncertainty of litigation, the case reflects the federal government’s continued focus on how insurers and healthcare organizations report diagnoses used to determine reimbursement levels.

Medicare Advantage plans rely on risk-adjustment models that pay insurers more for beneficiaries with serious health conditions. Because payments increase when patients are coded with more complex diagnoses, regulators have increasingly scrutinized how those codes are documented and reported.

Allegations of Inflated Diagnosis Coding

According to the Justice Department, Aetna submitted diagnosis information to the Centers for Medicare & Medicaid Services (CMS) that allegedly overstated the medical conditions of certain enrollees.

Part of the government’s case focused on a chart review initiative conducted for the 2015 payment year. Through this program, coders reviewed medical records to identify additional conditions that could support new diagnosis codes and potentially increase Medicare reimbursement.

However, federal authorities alleged the review process also revealed instances where previously submitted diagnosis codes lacked adequate documentation. Instead of withdrawing those unsupported codes and repaying CMS, the government claims Aetna allowed the codes to remain.

Morbid Obesity Coding at the Center of Dispute

Another key allegation involved diagnosis codes related to morbid obesity between 2018 and 2023.

The Justice Department claimed Aetna submitted or failed to remove morbid obesity diagnoses for beneficiaries whose recorded Body Mass Index values did not support that condition. Because risk-adjustment calculations rely heavily on diagnosis data, inaccurate coding can significantly affect Medicare Advantage payments.

Risk adjustment remains one of the most closely scrutinized aspects of the Medicare Advantage system, which now distributes more than $530 billion annually to private insurers.

Whistleblower Lawsuits Continue to Drive FCA Enforcement

The case originated from a whistleblower lawsuit filed by a former Aetna risk-adjustment coding auditor under the False Claims Act.

Under the law, whistleblowers may bring claims on behalf of the government and share in any recovery. In this case, the whistleblower will receive approximately $2.01 million from the settlement.

What This Means for Healthcare Providers

Although the case involves an insurer rather than a provider, it highlights the increasing scrutiny surrounding reimbursement practices across the healthcare system.

Providers participating in Medicare Advantage programs should ensure that diagnosis coding is supported by proper clinical documentation and that internal compliance processes can identify potential errors early.

How Patriot Group Can Help

Healthcare reimbursement rules and payer requirements continue to grow more complex. Patriot Group helps healthcare providers navigate payer disputes, defend audits, and strengthen compliance programs to protect their revenue.

If your organization needs assistance with billing compliance, payer disputes, or audit defense, contact Patriot Group today.