Fraud in the Medicare Advantage Program: a ~$1.3 billion year (so far!)
$1.228 billion. That is the combined value of the Medicare Advantage-related False Claims Act settlements announced by the Department of Justice so far in 2026. The cases, involving suits against The Villages Health System, Kaiser Permanente, Aetna, Matrix Medical Network, and others, continue to highlight intense enforcement focus on the industry.
Medicare Advantage (MA), also known as Medicare Part C, is a managed care alternative to traditional Medicare. It involves the government paying private insurers to cover Medicare-eligible beneficiaries based on a mathematical model that assigns relative values to variables like patient demographics and certain health conditions (like stroke or cancer). Generally, the government pays insurers more to cover older and sicker beneficiaries than younger or healthier ones.
This payment system stands in contrast to traditional Medicare’s fee-for-service model. In MA, which, or how many, services a beneficiary consumes generally does not affect how much the government pays for that person’s coverage. This system leads to very clear incentives for insurers: make your population look as sickly as possible.
The MA program has been a Department of Justice enforcement priority for years, and this year, there have been nearly $750 million in fraud settlements:
The largest of these settlements is also the largest Medicare Advantage fraud settlement to date. In January, Kaiser Permanente affiliates agreed to pay $556 million to resolve allegations that they submitted diagnosis codes that did not meet the MA program rules, resulting in increased Medicare premiums. The government alleged that Kaiser pressured physicians to add diagnoses to medical records after patient visits, sometimes many months later, and tied financial incentives to these submissions.
In March, Aetna agreed to pay $117.7 million. The government alleged that Aetna audited beneficiary medical records to identify additional diagnoses that could generate higher premium payments from the government but failed to remove previously submitted codes shown erroneous through the same audits (which would result in lower premiums). The settlement also addressed allegations concerning improperly submitted morbid-obesity diagnoses.
In June, Matrix Medical Network and HealthFair, and a former owner agreed to pay $56.5 million to resolve allegations involving false or invalid diagnosis codes. The government alleged that Matrix and HealthFair, both home health companies, generated diagnosis codes that were not properly supported because they lacked specificity, were contradicted by test results, or were merely self-reported by beneficiaries.
And August has been a very busy month, especially for healthcare providers, as opposed to insurers, working within the MA system.
First, Complete Health Partners Holdings agreed to pay $14.1 million to resolve allegations that it caused false mental health diagnoses to be submitted to MA plans by pressuring doctors to add these codes to patient medical records. Complete Health Partners is a provider group that “risk shares” with insurers, meaning, generally it gets some percentage of premiums paid by the government to insurers, aligning incentives to make their patient population look as sickly as possible.
Later, Monogram Health Services, a home care company that also risk shares with insurers, agreed to pay $2.4 million to resolve a suit alleging that the company submitted certain conditions, such as malnutrition, substance abuse, and coagulation defects, that did not affect patient care, or were not supported by the patients’ medical records.
Most recently, The Villages Health System agreed to a $541.5 million settlement that resolved a self-disclosure made by the provider group that alerted the government it, a risk-sharing provider, submitted improper diagnoses to the program. The diagnoses were improper because they were either unsupported by the medical record, or supported by improper addenda.
So far, 2026 has been a blockbuster year in this area, and more litigation is ongoing. Medicare Advantage is getting more popular, with over half of all Medicare beneficiaries now enrolled in an MA plan, and the program costs taxpayers truly tremendous amounts of money- nearly $534.4 billion in fiscal year 2025 alone. With trends like these, we should all expect more enforcement activity in the area, especially cases brought by whistleblowers.
This piece was written by Max Voldman, a Partner at Whistleblower Partners LLP
