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 medical documentation, the DOJ said.
However, Aetna elected not to delete or withdraw the codes, which would have required the company to pay the CMS back for any extra reimbursement.
In addition, for the 2018 to 2023 payment years, Aetna knowingly submitted untruthful diagnosis codes for morbid obesity for individuals whose body mass indices indicated they weren’t actually obese, the DOJ said.
CVS denied any misconduct.
“Aetna continues to disagree with the DOJ’s industry-wide allegations, and this settlement should not be seen as an acknowledgment of liability,” a CVS spokesperson said over email. “Instead, we are now able to avoid the uncertainty and further expense of prolonged litigation, as we maintain our focus on delivering first-in-class member experience across our Medicare Advantage plans."
Chart reviews — retrospective audits of member charts to identify and add new diagnosis codes — are one of the highest contributors to MA overpayments, research suggests.
Though the brunt of censure for upcoding has been levied against the largest MA carrier, UnitedHealthcare, smaller companies have also found themselves in the public eye as federal regulators and lawmakers crack down on the practice.
Elevance, for example, is currently staring down the barrel of weighty CMS sanctions also over issues with its risk adjustment data.
Meanwhile, the second Trump administration has proved more interested than many Washington watchers expected in cracking down on insurer gaming in MA, proposing additional guardrails around the risk adjustment process.
Specifically, regulators want to exclude patient diagnoses that aren’t linked to actual medical care patients receive from risk adjustment calculations — essentially eliminating the financial motivation insurers have to undergo chart reviews.
