Aetna Inc., described by the Justice Department as a national insurer incorporated under the laws of Pennsylvania, has agreed to pay $117.7 million to the federal government to resolve allegations that it used inaccurate and untruthful diagnosis codes to inflate the payments it collected for its Medicare Advantage members, the department announced in March 2026. The settlement resolves two distinct sets of allegations: one tied to a 2015 program that reviewed medical charts for additional diagnoses, and a separate case covering morbid-obesity codes submitted between 2018 and 2023. Medicare Advantage enrollees will not see any of the settlement money directly, but the case adds Aetna to a list of companies the government says manipulated the program’s risk-adjustment system for profit.
How Medicare Advantage's Risk-Adjustment Payments Work
Under Medicare Advantage, also known as Medicare Part C, beneficiaries can leave traditional Medicare and enroll in private plans run by Medicare Advantage Organizations, or MAOs. The Centers for Medicare and Medicaid Services pays each MAO a fixed monthly amount that is adjusted for risk factors tied to a beneficiary’s expected health costs, paying more for beneficiaries expected to incur higher health care costs. To calculate those adjustments, CMS relies on the diagnosis codes MAOs submit from members’ medical records, a system that determines how much of the government’s Medicare Advantage spending each MAO collects, which is why regulators treat accurate diagnosis coding as central to protecting that money. Assistant Attorney General Brett Shumate said the government pays private insurers over 530 billion dollars each year to care for Americans enrolled in Medicare Advantage, and the department will continue to hold accountable insurers that knowingly submit inaccurate or unsupported diagnoses to improperly inflate reimbursement. The government’s core allegation goes a step further than a single bad code: it says Aetna submitted inaccurate diagnosis data to inflate risk-adjustment payments, then declined to withdraw the incorrect codes and repay CMS once it had reason to know they were wrong, and separately certified in writing to CMS that the data it had submitted was accurate and truthful.
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A 2015 Chart-Review Program That Ran in One Direction
The Justice Department said the first set of allegations centers on a 2015 chart review program in which Aetna paid diagnosis coders to examine members’ medical records and flag every condition the records could support. Aetna then submitted the additional diagnosis codes those chart reviews produced to CMS to collect higher payments. But when the same chart reviews turned up diagnosis codes Aetna had previously reported that the records did not actually support, the government says Aetna did not delete or withdraw them, a step that would have required Aetna to repay CMS. Investigators describe the pattern as one that ran only in the direction of higher payments, a characterization detailed in the settlement agreement resolving the chart review allegations.
Diagnosis Codes for Morbid Obesity, 2018 to 2023
The second, larger set of allegations covers payment years 2018 through 2023 and concerns diagnosis codes for morbid obesity. Medical records for a member diagnosed as morbidly obese typically include one or more recorded Body Mass Index readings, and the government says Aetna submitted, or failed to delete, morbid obesity codes for members whose recorded BMI did not support that diagnosis, which increased the payments CMS made on their behalf. That claim was first raised in a whistleblower lawsuit, United States ex rel. Mary Melette Thomas v. Aetna Inc., case number 24-cv-339, filed in the U.S. District Court for the Eastern District of Pennsylvania. Thomas, a former Aetna risk-adjustment coding auditor, is set to receive a 2,012,500 dollar share of the settlement under the agreement resolving the morbid obesity allegations, compensation the False Claims Act’s whistleblower provisions allow for private parties who sue on the government’s behalf and are later found to have supplied a valid basis for recovery.
The Fraud Section and U.S. Attorney's Office Behind the Case
The settlement carries Justice Department press release number 26-239 and resulted from a coordinated investigation among the Civil Division’s Commercial Litigation Branch, Fraud Section, the U.S. Attorney’s Office for the Eastern District of Pennsylvania, and HHS-OIG. Fraud Section attorneys Nelson Wagner and Edward Crooke, Assistant U.S. Attorneys Peter Carr and Gregory B. in den Berken, and Civil Chief Gregory David for the Eastern District of Pennsylvania handled the matter. The department noted separately that tips and complaints about potential fraud, waste, abuse, or mismanagement in federal health programs can be directed to HHS at its fraud-reporting site or through the department’s tip line.
No Determination of Liability, and a Message to the Industry
U.S. Attorney David Metcalf for the Eastern District of Pennsylvania said the government pays Medicare Advantage organizations to facilitate vital health care for seniors and other vulnerable citizens, and that when corporations or individuals threaten the program by diverting those limited government resources through fraud, waste, or abuse, the government will continue to pursue all available remedies against them. The department was explicit on this point, stating in its own release that “the claims resolved by the settlement are allegations only and there has been no determination of liability.” Acting Deputy Inspector General for Investigations Scott Lampert of the Department of Health and Human Services Office of Inspector General framed the case as a message to the rest of the industry: Medicare Advantage relies on accurate reporting, he said, and attempts to manipulate the system undermine both the program’s integrity and the beneficiaries it serves, and today’s settlement makes clear that no company is beyond accountability, no matter how large or well known.
The Benefits That Go Unfiled
Separately, enforcement actions like this one recover money for the federal government, not for individual Medicare Advantage members, and several benefit programs that could help those same members remain opt-in with no notice ever mailed to whoever qualifies. Medicare Savings Programs and Extra Help for prescription costs both require a separate application even for enrollees already receiving Medicare Advantage, and states hold unclaimed property that sits under an owner’s name until someone files a claim. None of the three is automatic, and none is triggered by a settlement like Aetna’s.
It is a 69-page guide covering eleven programs, laying out the 2026 income limits and the phone number to call in every state.
See the full list and the 2026 income limits in The Benefits Checklist.
This story was researched and written with AI assistance and edited before publication.
Warren Cohen is a finance writer based in Phoenix, Arizona, covering personal finance topics including credit, banking, and beginner investing. He earned his degree in business administration from Arizona State University and began his career working in consumer finance, where he gained direct experience with lending and credit systems. He now writes for personal finance websites and fintech platforms, focusing on clear, practical content that helps readers make informed financial decisions.
