{"id":146229,"date":"2026-04-08T15:08:38","date_gmt":"2026-04-08T19:08:38","guid":{"rendered":"https:\/\/medcitynews.com\/?p=146229"},"modified":"2026-04-08T15:08:41","modified_gmt":"2026-04-08T19:08:41","slug":"jefferson-health-aetna-lawsuit","status":"publish","type":"post","link":"https:\/\/medcitynews.com\/2026\/04\/jefferson-health-aetna-lawsuit\/","title":{"rendered":"Jefferson Health Sues Aetna As Providers\u2019 Frustration with MA Grows"},"content":{"rendered":"\n

Philadelphia-based health system Jefferson Health<\/a> is suing Aetna<\/a>, claiming the payer is unfairly reducing payments for some hospital stays under Medicare Advantage. Aetna said that it has done nothing wrong.<\/p>\n\n\n\n

The complaint<\/a> \u2014 filed Monday by Jefferson and co-plaintiff Lehigh Valley Physician Hospital Organization \u2014 centers on Aetna\u2019s \u201clevel of severity inpatient payment policy\u201d for Medicare Advantage beneficiaries, which took effect on January 1. <\/p>\n\n\n\n

Under this policy, some hospital stays that are technically approved as inpatient are paid at a lower \u201cobservation-level\u201d rate if Aetna decides the patient wasn\u2019t sick enough. This mainly applies to hospital stays lasting between one and four midnights, even when a physician has admitted the patient as an inpatient. <\/p>\n\n\n\n

In the lawsuit, the plaintiffs described a situation from earlier this year in which Aetna deemed the following patient as \u201clow severity\u201d: a 72-year-old who came to the hospital with altered mental status, a prior stroke and hypoxia \u2014 who then required intubation and developed acute renal failure after admission.<\/p>\n\n\n\n

\u201cAfter the patient\u2019s second midnight in the hospital, Aetna determined the patient was \u2018low severity,\u2019 even though the patient was intubated in an ICU, had acute renal failure, and was administered broad spectrum IV antibiotics for multifocal pneumonia. The admitting physician determined the patient\u2019s inpatient stay was medically necessary, but Aetna decided the patient was not \u2018severe\u2019 enough to qualify for payment at an inpatient rate,\u201d the complaint read.<\/p>\n\n\n\n

Jefferson argued that this effectively \u201cdowncodes\u201d legitimate inpatient care, therefore reducing hospital revenue and creating additional administrative burdens for providers to deal with as they appeal the lower payments. The health system also said that Aetna unilaterally created a new payment tier that was never negotiated as a part of their shared Medicare Advantage contract.<\/p>\n\n\n\n

The complaint also claims that the policy violates CMS\u2019 two-midnight rule, which requires Medicare to cover hospital stays as inpatient when a physician expects the patient to need care for at least two midnights. It asserts that Medicare Advantage plans must follow the same standard. <\/p>\n\n\n\n

Overall, Jefferson contends that by paying some qualifying inpatient stays at the lower rate, Aetna is ignoring federal guidelines, breaching its provider contracts and shifting financial risk onto hospitals. The health system is seeking an injunction stopping Aetna from using the policy, as well as compensation for legal fees and damages.<\/p>\n\n\n\n

Aetna is defending its policy, according to a statement a company spokesperson shared with MedCity News<\/em>.<\/p>\n\n\n\n

\u201cAetna\u2019s policies, including the Level of Severity Inpatient Payment Policy, comply with all applicable federal law and regulations and with the terms of our provider contracts. Aetna disagrees with the allegations in the lawsuit and will respond in the appropriate forum,\u201d the statement read.<\/p>\n\n\n\n

This lawsuit touches on a broader national fight<\/a> between hospitals and Medicare Advantage insurers \u2014 one in which hospitals say MA plans apply stricter medical-necessity criteria than traditional Medicare and often reduce payments through post-claim reviews, and payers argue they\u2019re preventing unnecessary admissions and managing their spending.<\/p>\n\n\n\n

If Jefferson wins the case, the ruling could limit how Medicare Advantage plans adjust hospital payments for short stays.

Photo: One Punch, Getty Images<\/em><\/p>\n","protected":false},"excerpt":{"rendered":"

Jefferson Health in Philadelphia is suing Aetna over a new Medicare Advantage payment policy that hospitals say unfairly reduces reimbursements for legitimate inpatient stays. The case highlights a broader clash between providers and Medicare Advantage plans over \u201cdowncoding\u201d short hospital stays and controlling costs.<\/p>\n","protected":false},"author":31620,"featured_media":146230,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"om_disable_all_campaigns":false,"featured_image_focal_point":[],"homepage_placement":"top","homepage_placements":{"top":true,"featured":true,"sidebar":false},"homepage_alternative_layout":false,"featured_categories":[48,75,123,51659],"hide_from_feed":false,"footnotes":""},"categories":[48,123,75,51659],"tags":[351,39691,8775,37111,53543,16479,3150],"class_list":["post-146229","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-hospitals-channel","category-legal","category-payers","category-providers","tag-aetna","tag-jefferson-health","tag-lawsuit","tag-legal","tag-ma-2","tag-medicare-advantage","tag-philadelphia"],"acf":[],"yoast_head":"\nJefferson Health Sues Aetna As Providers\u2019 Frustration with MA Grows - MedCity News<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/medcitynews.com\/2026\/04\/jefferson-health-aetna-lawsuit\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Jefferson Health Sues Aetna As Providers\u2019 Frustration with MA Grows - MedCity News\" \/>\n<meta property=\"og:description\" content=\"Jefferson Health in Philadelphia is suing Aetna over a new Medicare Advantage payment policy that hospitals say unfairly reduces reimbursements for legitimate inpatient stays. 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