A major Medicare Advantage insurer settled allegations of overbilling by paying the federal government $342 million. The payment marks a potential shift in how regulators oversee the program.
The settlement from Elevance Health—which covers roughly 2 million Medicare Advantage enrollees—was wired to the Centers for Medicare & Medicaid Services (CMS) on May 27. Government lawyers disclosed the transaction in a June 22 filing, describing it as a “remittance of the total overpayment amount” identified through audits.
The move followed a February enforcement action by CMS, which threatened to block Elevance from enrolling new members unless it corrected what the agency called “substantial and persistent noncompliance” with billing rules. Those rules require insurers to submit accurate data and refund overpayments when discovered.
David Lipschutz, an attorney with the Center for Medicare Advocacy, said the action was unusual. “Plans typically delay repayments for years,” he noted.
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Medicare Advantage plans, which now cover 55% of Medicare beneficiaries, have faced growing scrutiny over billing practices. The program pays insurers higher rates for sicker patients, but audits have repeatedly found that plans inflate diagnoses to increase payments—often without proper documentation. Whistleblower lawsuits and government investigations have accused insurers of exaggerating patient illnesses, though the industry disputes these claims.
For years, CMS struggled to recover overpayments. In 2014, the agency abandoned a proposed rule to address overbilling after strong industry opposition. Even when audits uncovered tens of millions in overcharges, CMS collected only a fraction of the amounts owed. The recent payment may indicate a change in approach.
Most recoveries have come through whistleblower lawsuits under the False Claims Act. In January, Kaiser Permanente paid $556 million to resolve allegations it billed for undocumented conditions. Elevance’s payment, however, resulted from direct CMS enforcement, a rare step that could push other insurers to settle.
While the $342 million payment is a record for CMS-driven repayments, it represents a small portion of Medicare Advantage revenue. The stakes extend beyond finances. Medicare Advantage plans provide benefits traditional Medicare does not, such as dental and vision coverage, often at lower out-of-pocket costs. Critics argue the program’s payment structure encourages overbilling, costing taxpayers billions annually. A 2023 study in JAMA Health Forum estimated Medicare overpays these plans by $27 billion per year due to coding errors.
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For patients, the impact could become more noticeable if CMS tightens enforcement. Insurers might respond by reducing benefits or increasing premiums to offset lost revenue. The Elevance case suggests regulators are now willing to act, though it remains uncertain whether this signals a broader crackdown.
David Meyers, an associate professor at Brown University, called the settlement “a big win for CMS.” He added that it remains unclear if this marks a lasting change.
CMS did not respond to requests for comment. Elevance spokesperson Leslie Porras said the company “continues to engage in constructive dialogue” with CMS and remains “optimistic that a resolution can be reached.”
Doctors have also faced pressure to follow updated guidance from health authorities.
