UnitedHealth Group shares tumbled Friday on a report that the U.S. Department of Justice has started an investigation into the health care giant's Medicare billing practices.
The Wall Street Journal said federal officials have launched a civil fraud investigation into how the company records diagnoses that lead to extra payments for its Medicare Advantage, or MA, plans. Those are privately run versions of the government's Medicare coverage program mostly for people ages 65 and over.
The paper, citing anonymous sources, said the probe focused on billing practices in recent months.
UnitedHealth said it wasn't aware of the start of any new activity as the paper reported. It criticized the Journal's report and said in a statement posted on its website, "Any suggestion that our practices are fraudulent is outrageous and false."
The company's UnitedHealthcare business covers more than 7.8 million people as the nation's largest provider of Medicare Advantage plans. The business has been under pressure in recent quarters due to rising care use and rate cuts.
The Journal's report "adds to a growing worry that expanded oversight around the insurers, particularly in the MA program, could pressure business practices, earnings, and investor sentiment," Leerink Partners analyst Whit Mayo said in a research note.
Shares of the Minnetonka, Minnesota, company fell more than 6% Friday. Shares of other prominent Medicare Advantage insurers like Humana slipped while broader indexes also fell.
UnitedHealth Group Inc. stock has been in a rut since early December, when UnitedHealthcare CEO Brian Thompson was fatally shot in midtown Manhattan on his way to the company's annual investor meeting. A 26-year-old suspect, Luigi Mangione, who led authorities on a five-day manhunt, was in court Friday for the first time since his December arraignment on state murder and terror charges.
Company shares shed more than $100 in value in the weeks following Thompson's death, as the shooting gave rise to an outpouring of grievances about insurance companies.
