Jefferson Health's Lawsuit Against Aetna Challenges Medicare Advantage Policy

Jefferson Health, headquartered in Philadelphia, has initiated legal proceedings against Aetna. The lawsuit challenges Aetna's “level of severity inpatient payment policy” applicable to Medicare Advantage members, alleging that it contradicts existing Medicare regulations. Filed on April 6 in a Pennsylvania federal court, the case underscores significant tensions between healthcare providers and insurance carriers.

Effective from 2026, following a delayed implementation initially scheduled for November 2025, Aetna's policy introduces a dual rate structure for inpatient admissions. This policy specifically applies to urgent or emergency hospitalizations lasting between one and fewer than five midnights. Jefferson Health contends that this approach infringes upon the Centers for Medicare & Medicaid Services' (CMS) two-midnight rule, which mandates coverage for hospital admissions expected to extend beyond two midnights, aligning with Original Medicare standards.

According to the lawsuit, Aetna's policy has resulted in administrative complexities and financial challenges, affecting Jefferson Health's operations by diverting resources away from patient care. Aetna, however, argues that its inpatient payment policy is compliant with federal laws and maintains its commitment to contest the allegations. Jefferson Health seeks a court declaration, an injunction to halt the policy, and the recovery of legal costs, emphasizing the broader implications for regulatory compliance in Medicare Advantage plans.