Last summer, I wrote about the DOJ and HHS relaunching their joint False Claims Act Working Group, with Medicare Advantage risk adjustment fraud listed as one of its top enforcement priorities. The Aetna settlement announced earlier this month is a direct example of that initiative delivering results.

What Happened

Aetna has agreed to pay $117.7 million to resolve allegations that it violated the False Claims Act by submitting inaccurate diagnosis codes for its Medicare Advantage enrollees in order to inflate the risk-adjusted payments it received from CMS.

Under the Medicare Advantage program, CMS pays insurers a fixed monthly amount per enrollee that is adjusted based on how sick that enrollee is. The sicker the patient, the higher the payment. The government alleges that Aetna exploited this system in two ways:

1. For payment year 2015, Aetna ran an internal “chart review” program in which it hired diagnoses coders to review patient medical records. When those reviews identified diagnoses that could generate additional payments, Aetna submitted them to CMS. But when the same reviews showed that previously submitted codes were unsupported and Aetna was overpaid, Aetna did not delete those codes or return the money.
2. For payment years 2018 through 2023, Aetna submitted or failed to withdraw inaccurate diagnosis codes for morbid obesity for patients whose recorded BMI did not meet the clinical threshold for that diagnosis.

The Whistleblower

The morbid obesity portion of the case was brought by a former Aetna risk-adjustment coding auditor under the qui tam provisions of the False Claims Act. Qui tam allows private individuals with knowledge of fraud against the government to file suit on the government’s behalf and share in any recovery. The whistle blower in this case received approximately $2 million of the settlement.

This is a reminder that False Claims Act cases frequently originate from inside an organization from employees who see something, report it, and are entitled to a significant financial reward for doing so.

What this Means for Physicians and Medical Practices

While this case targeted a major insurer rather than a physician practice, there are important takeaways for anyone billing Medicare Advantage:

• Diagnosis coding must be supported by documentation. Whether you are submitting codes directly or working with a Medicare Advantage plan that conducts chart reviews, the diagnoses billed to CMS need to be accurate and clinically supported.
• Knowing about an error and failing to correct it creates liability. The False Claims Act does not require intentional fraud. Reckless disregard or deliberate ignorance of a known problem is enough.
• The government is actively looking. The DOJ-HHS Working Group has explicitly identified Medicare Advantage risk adjustment as a priority enforcement area, and it is using data analytics and AI to identify billing patterns that trigger investigations.

The Bigger Picture

The Aetna settlement is one of the largest False Claims Act healthcare recoveries announced so far in 2026, but it is unlikely to be the last. Medicare Advantage now covers more than half of all eligible Medicare beneficiaries and accounts for over $530 billion in annual federal spending. That level of spending, combined with a payment model that rewards higher diagnoses, makes it a natural enforcement target.

If you have questions about False Claims Act compliance, Medicare Advantage billing, or your practice’s exposure, feel free to reach out.