Aetna, a cvs health subsidiary, Faces Scrutiny Over MA Payment Policy

Aetna, a cvs health subsidiary, Introduces New Reimbursement Model

Aetna, a cvs health subsidiary, is rolling out a new Medicare Advantage (MA) inpatient reimbursement policy that alters how hospitals are paid for urgent and emergency claims.

Starting November 15, the insurer will apply a severity-based reimbursement model. Under the change, inpatient admissions for urgent or emergency cases lasting more than one midnight will be approved by default.

However, if the patient fails to meet the Milliman Care Guidelines (MCG) for inpatient status, Aetna, the cvs health subsidiary, will reimburse the facility at the lower observation services rate instead of the full inpatient rate.

Legal Analysts Raise Concerns Over the cvs health subsidiary Policy

Legal analysts note that Aetna’s policy marks a significant shift in how the insurer processes inpatient claims for its Medicare Advantage members. Elizabeth Purdy, an associate attorney, explained in a blog post that Aetna, a cvs health subsidiary, previously issued formal denials when disputing a patient’s level of care, which hospitals could then challenge.

Under the new approach, however, the insurer provides immediate payment at a reduced rate. Since the remittance reflects payment in full, hospitals are unable to appeal. She described this as a quiet downgrade that sidesteps the usual review procedures.

AHA Pushes Back Against the cvs health subsidiary

In a provider notice, Aetna explained that the revised payment system is designed to speed up hospital reimbursements for inpatient admissions that are first denied.

The American Hospital Association (AHA) has written to Aetna president Steve Nelson, urging the company to withdraw its newly introduced policy.

Richard Pollack, president and CEO of the AHA, warned that the policy risks weakening the transparency patients depend on for care decisions, diminishing regulatory safeguards that protect coverage, and threatening hospitals’ capacity to deliver accessible, high-quality care.

Dispute Over How the cvs health subsidiary Handles Observation Status

According to the AHA, the new policy replaces the common practice — used by Aetna (a cvs health subsidiary) and most other insurers — of rejecting inpatient admissions considered not medically necessary and reclassifying them as outpatient observation.

Under the revised approach, Aetna, the cvs health subsidiary, will authorize those inpatient stays but compensate hospitals at a reduced rate it set on its own, bypassing the agreed-upon contract and negotiation process.

Impact of the cvs health subsidiary on Medicare Advantage Data

The policy will be limited to Aetna’s Medicare Advantage and dual-eligible business lines. The AHA warned that such a change could skew data tied to the cvs health subsidiary’s performance across several metrics used in the Medicare Advantage Star Ratings Program.

The policy seems to sidestep existing federal requirements that govern coverage for Medicare Advantage enrollees.

Pollack explained that, at present, when Aetna, a cvs health subsidiary, rejects an inpatient claim and classifies it as observation, the action falls under federal rules. These regulations oblige insurers to follow CMS coverage standards and prohibit them from relying on their own criteria to decide whether care is medically necessary and eligible for coverage.

Financial Pressure Created by the cvs health subsidiary Policy

Pollack added that this payment model will place additional strain on a health care system already under financial pressure, particularly as hospitals face steadily increasing patient care costs.

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Additional Content

Financial Risks for Hospitals From the cvs health subsidiary Policy

Many hospitals are now evaluating how this policy could affect their financial stability. Because the reduced rates are paid immediately, but underwritten by internally defined severity criteria (like the MCG), hospitals may see a growing number of stays classified as “low severity” even when physicians believe full inpatient care is warranted. These shifts could lead to unexpected revenue losses.

Patient Concerns About the cvs health subsidiary Approach

Patient advocacy groups are also raising concerns. Beneficiaries who assume an inpatient admission will carry certain protections, cost-sharing rules, and coverage rights might find themselves facing observation status restraints in disguise. The lack of formal denials means less clarity for patients about what was covered and why, potentially increasing confusion and out-of-pocket expenses.

Regulatory Scrutiny of the cvs health subsidiary

Regulators and elected officials are watching closely. Some in the healthcare community argue that this new reimbursement strategy may violate the letter or spirit of CMS rules — including the “Two-Midnight Rule” that applies to inpatient stays. If those concerns are borne out, there could be legal challenges, regulatory investigations, or even legislative action to ensure that Medicare Advantage plans adhere to uniform standards.

Preparing for the Future Under the cvs health subsidiary Policy

Hospitals are advised to review their contracts with Aetna (a cvs health subsidiary), audit recent claims, and prepare for disagreements over payment classifications. Some hospital systems may join collective efforts, via associations like the AHA, to push for rescinding or altering the policy. Transparent documentation, physician justification of inpatient status, and diligent tracking of denials or underpayments will be more important than ever.