UnitedHealth Group Stock Plummets Amid DOJ Investigation News

MINNETONKA, Minn. — Shares of UnitedHealth Group fell sharply early Friday following reports of a federal investigation into the health care giant’s Medicare billing practices. The U.S. Department of Justice has reportedly initiated a civil fraud probe concerning the company’s handling of diagnoses that can lead to increased payments for its Medicare Advantage plans.

The Wall Street Journal reported that federal officials are examining billing practices from recent months, specifically how UnitedHealth records patients’ diagnoses. Medicare Advantage plans, which are privately run, provide coverage primarily for individuals aged 65 and older.

In response to the investigation, UnitedHealth has not issued an immediate comment. This development is critical as the company’s UnitedHealthcare division serves over 7.8 million members, making it the largest provider of Medicare Advantage plans in the country. The company’s stock fell more than 10% in pre-market trading, dropping over $52 to dip below $447.

Other competitors in the Medicare Advantage sector, including Humana, also experienced declines in their stock values. UnitedHealth’s stock had been struggling since early December, following the fatal shooting of UnitedHealthcare CEO Brian Thompson in New York City.

As the DOJ’s investigation unfolds, past reports have suggested that UnitedHealth has seen a significant uptick in the diagnoses secured by patients after they enroll in Medicare Advantage plans serviced by UnitedHealth-employed doctors. A recent analysis indicated that billions in Medicare records revealed substantial increases in lucrative diagnostic codes.

UnitedHealth asserted that it operates at the highest compliance levels for Medicare Advantage plans and condemned allegations of fraudulent practices as “outrageous and false.”

The DOJ has been contacting medical providers referenced in previous reports by the Journal, which have claimed that Medicare paid UnitedHealth billions of dollars linked to questionable diagnoses. These interviews occurred as recently as January 31.

Furthermore, UnitedHealth faces intensified scrutiny following reports last fall alleging an increase in claim denials as the company incorporated artificial intelligence in its decision-making process. The prior authorization denial rate for post-acute care reportedly increased from 10.9% in 2020 to 22.7% in 2022.

The company refuted these claims, asserting that they oversimplify both the Medicare Advantage program and its operational practices. This investigation also comes in the wake of a civil antitrust lawsuit filed by the DOJ and multiple state attorneys general aiming to block UnitedHealth’s proposed $3.3 billion acquisition of Amedisys, a home health services provider.

The Department of Justice declined to provide any additional comments on the ongoing investigation.