A major Medicare Advantage insurer paid the federal government over $342 million to settle allegations of overcharging the program for years, according to court records.
The payment from Elevance Health, which covers about 2 million Medicare beneficiaries, was wired to the Centers for Medicare & Medicaid Services on May 27. Government lawyers disclosed the transaction in a June 22 court filing, describing it as a remittance of the total overpayment amount identified through audits.
CMS threatened enrollment ban over billing issues
CMS took enforcement action in February, warning Elevance it would block new enrollments in its Medicare Advantage plans unless the company corrected what the agency called substantial and persistent noncompliance with federal billing rules. Those rules require insurers to submit accurate data and return overpayments when discovered.
Elevance spokesperson Leslie Porras said the company continues to engage in constructive dialogue with CMS and remains optimistic a resolution can be reached. Porras added that the company values its longstanding relationship with the agency.
A rare enforcement win for CMS
The payment marks the first time CMS has successfully pressured a Medicare Advantage plan to repay such a large sum in alleged overpayments. Years of government audits have shown widespread overbilling in the program, but this case may signal a change in enforcement.
“I’ve never heard of something like this before,” said David Lipschutz, an attorney with the Center for Medicare Advocacy. Plans typically delay repayments for years through legal challenges.
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David Meyers, an associate professor at the Brown University School of Public Health, called the payment significant and a step toward holding insurers accountable. “It’s a big win for CMS to recover that amount,” he said.
Medicare Advantage plans now cover more than 35 million Americans—about 55% of all Medicare beneficiaries. The private plans, which offer extra benefits like dental and vision coverage, receive higher payments for sicker patients. Critics argue insurers often exaggerate patients’ conditions to increase payments, though the industry denies this practice.
Whistleblower lawsuits, mostly filed by former employees, have been the primary method for recovering alleged overpayments. In January, Kaiser Permanente agreed to pay $556 million to settle Justice Department allegations of billing for conditions patients didn’t have. Kaiser stated it settled to avoid prolonged litigation.
CMS has struggled to address overbilling through regulation. In 2014, the agency dropped a proposed rule to curb improper payments after facing industry opposition. Even when audits uncovered large overpayments, CMS collected only a fraction of the amounts owed.
The financial stakes remain high. Studies estimate Medicare overpays Advantage plans billions annually due to coding errors that inflate bills. For Elevance, the settlement represents a small portion of its Medicare revenue, but experts believe it may push other insurers to review their practices.
Most Medicare Advantage plans operate on thin margins, and even modest repayments could lead to changes in billing. Whether CMS will continue this approach remains uncertain.
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Richard Kronick, a former federal health official and professor at the University of California-San Diego, called the payment substantial but said it demonstrated CMS asserting its authority. He believes the agency’s enforcement could discourage future overbilling.
Elevance has been in legal disputes with the government since 2020, when the Justice Department sued the company under the False Claims Act. That case remains pending. In court filings, the insurer denied wrongdoing, arguing CMS had known about its billing practices for years without taking action.
The company’s April filing with the Securities and Exchange Commission estimated its potential liability in the case at roughly $935 million. It remains unclear whether the $342 million payment will resolve the CMS threat to block new enrollments.
Meyers said the settlement could encourage more enforcement. “Whether this marks a lasting change remains to be seen,” he said.
The case highlights broader concerns about healthcare leadership and oversight in federal programs.
