UnitedHealth Group (UNH) saw its stock price tumble nearly 9% on Friday following reports that the U.S. Department of Justice (DOJ) has launched a civil fraud investigation into the company’s Medicare billing practices.
The Wall Street Journal, citing sources familiar with the matter, reported that federal investigators are examining whether UnitedHealth improperly documented diagnoses to secure higher government payments for its Medicare Advantage plans.
Shares of UnitedHealth dropped to $455.34, marking the company’s steepest single-day percentage decline since March 2020. The news rattled investors and added to mounting scrutiny over the insurer’s business practices, which are already under antitrust investigation by federal regulators.
Medicare Advantage Billing Under Scrutiny
Medicare Advantage is a government-funded program in which private insurers manage benefits for enrollees in exchange for fixed monthly payments. These payments increase when patients have certain diagnoses, creating financial incentives for insurers to document more severe conditions.
According to the Journal’s report, the DOJ is investigating whether UnitedHealth systematically recorded additional diagnoses to boost revenue, including at physician groups owned by the company. The probe follows previous concerns from lawmakers and watchdog agencies about the Medicare Advantage payment model, which has been criticized for overbilling taxpayers by billions of dollars annually.
UnitedHealth has pushed back against the allegations, calling the Journal’s reporting “misinformation.” In a statement, the company said, “Any suggestion that our practices are fraudulent is outrageous and false.” The DOJ has not publicly commented on the investigation.
Medicare Advantage is a government-funded program in which private insurers manage benefits for enrollees in exchange for fixed monthly payments. These payments increase when patients have certain diagnoses, creating financial incentives for insurers to document more severe conditions.
According to the Journal’s report, the DOJ is investigating whether UnitedHealth systematically recorded additional diagnoses to boost revenue, including at physician groups owned by the company. The probe follows previous concerns from lawmakers and watchdog agencies about the Medicare Advantage payment model, which has been criticized for overbilling taxpayers by billions of dollars annually.
UnitedHealth has pushed back against the allegations, calling the Journal’s reporting “misinformation.” In a statement, the company said, “Any suggestion that our practices are fraudulent is outrageous and false.” The DOJ has not publicly commented on the investigation.
Broader Challenges for UnitedHealth
The Medicare probe is the latest in a series of challenges for UnitedHealth. The DOJ is already investigating the company’s market dominance in healthcare services through its Optum subsidiary, which owns physician groups and pharmacy benefit managers. Additionally, federal regulators last year blocked UnitedHealth’s $3.3 billion acquisition of Amedisys, a home health company, citing antitrust concerns.
The company has also faced reputational damage in recent months following the high-profile killing of a UnitedHealth executive, which sparked broader discussions about insurers' claim denial practices. In December, reports emerged that Medicare payments to UnitedHealth surged due to questionable diagnoses, with some doctors alleging pressure to code more lucrative conditions.
With UnitedHealth shares now down 25% over the past three months, the latest probe adds another layer of uncertainty for investors. While some analysts believe the stock’s sharp decline is an overreaction, others warn that increased regulatory scrutiny could weigh on the company’s long-term growth.
As investigations unfold, the healthcare giant remains at the center of intensifying debates over Medicare spending, corporate consolidation, and the ethics of for-profit healthcare.
The Medicare probe is the latest in a series of challenges for UnitedHealth. The DOJ is already investigating the company’s market dominance in healthcare services through its Optum subsidiary, which owns physician groups and pharmacy benefit managers. Additionally, federal regulators last year blocked UnitedHealth’s $3.3 billion acquisition of Amedisys, a home health company, citing antitrust concerns.
The company has also faced reputational damage in recent months following the high-profile killing of a UnitedHealth executive, which sparked broader discussions about insurers' claim denial practices. In December, reports emerged that Medicare payments to UnitedHealth surged due to questionable diagnoses, with some doctors alleging pressure to code more lucrative conditions.
With UnitedHealth shares now down 25% over the past three months, the latest probe adds another layer of uncertainty for investors. While some analysts believe the stock’s sharp decline is an overreaction, others warn that increased regulatory scrutiny could weigh on the company’s long-term growth.
As investigations unfold, the healthcare giant remains at the center of intensifying debates over Medicare spending, corporate consolidation, and the ethics of for-profit healthcare.
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