CVS Health's (NYSE:CVS) insurance unit, Aetna, has agreed to pay $117.7 million to resolve allegations that it defrauded the U.S. government by submitting inaccurate diagnosis codes for Medicare Advantage enrollees.
The settlement, announced Wednesday by the U.S. Department of Justice, concludes a multi-year investigation into the insurer's "risk adjustment" practices.
The federal government alleged that between 2018 and 2023, Aetna knowingly submitted untruthful data to the Centers for Medicare & Medicaid Services (CMS).
Specifically, the Justice Department charged that Aetna claimed patients suffered from morbid obesity despite having Body Mass Index (BMI) records that were inconsistent with such a diagnosis.
Under the Medicare Advantage framework, private insurers receive higher monthly payments for patients diagnosed with more severe or chronic conditions.
In addition to the obesity-related charges, Aetna was accused of failing to withdraw inaccurate diagnosis codes it discovered during an internal records review dating back to 2015.
Assistant Attorney General Brett Shumate noted that private insurers receive over $530 billion in annual government funding for Medicare Advantage, emphasizing the need for rigorous oversight of diagnosis accuracy.
CVS Health, which acquired Aetna in 2018, stated it settled to avoid the "uncertainty and expense of litigation."
The Rhode Island-based healthcare giant maintained its disagreement with the allegations, stating the settlement is not an admission of liability.
The case originated from a 2024 whistleblower lawsuit filed by Mary Melette Thomas, a former Aetna risk adjustment coding auditor.
Under the provisions of the False Claims Act, Thomas is slated to receive $2.01 million as her share of the recovery.