Dive Brief:

• CVS’ health insurer Aetna has agreed to pay $117.7 million to resolve allegations that it submitted incorrect diagnoses for its Medicare Advantage members in order to increase its reimbursement, in violation of the False Claims Act.
• The settlement announced by the Department of Justice on Wednesday comes after federal regulators accused Aetna of submitting inaccurate data to the CMS, failing to withdraw it and falsely certifying it was correct to inflate the company’s risk adjustment payments.
• CVS did not admit liability and said it agreed to the settlement to avoid the expense of drawn-out litigation.

Dive Insight:

In MA, the government pays private insurers a flat fee per member, adjusted up or down based on how sick that member is. This payment structure is meant to motivate insurers to control medical costs by allowing them to keep a portion of any savings, without incentivizing them to only enroll healthier seniors.

However, this system has also spurred a practice called upcoding, in which insurers exaggerate the health needs of their members in order to boost their reimbursement. Estimates vary, but upcoding is thought to drive tens of billions of dollars in overpayments to MA plans each year.

The DOJ’s complaint accused Aetna of operating a chart review program in 2015 in which the company paid coders to review medical records and find new conditions it could use to increase its members’ risk scores. Some of those codes were not supported by actual...

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