UnitedHealth Group is under investigation by the Justice Department for its Medicare Advantage billing practices, The Wall Street Journal reported Friday. The civil fraud probe is looking at whether diagnoses were routinely made to trigger extra payments. UNH stock crashed to a 10-month low in early stock market action.
Stocks of other Medicare Advantage players including Humana and CVS Health are also down on the news.
UnitedHealth Fraud Probe
A series of Wall Street Journal articles last year showed that Medicare had paid UnitedHealth billions of dollars to care for patients with diagnoses that the paper deemed "questionable."
UnitedHealth has disputed the Journal's conclusions as flawed and relying on "often incomplete and inaccurate data."
The latest report indicates that Justice Department attorneys have interviewed medical providers named in the Journal articles as recently as Jan. 31. That shows the investigation, which was reportedly launched in recent months, continued in the first weeks of the Trump administration.
The Biden administration began multiple investigations of UnitedHealth, including an antitrust probe looking into how the company's UnitedHealthcare managed-care division interacts with its Optum health services division, which is one of the nation's largest employers of physicians.
The Biden Justice Department also sued to block UnitedHealth's acquisition of Amedisys, a leading provider of home health care.
A big unknown is how aggressive the Trump administration will be in pursuing these probes. The Justice Department declined comment for the Journal's article.
UnitedHealth Pledges To Fix Health Care
UNH stock crashed 17% in December as UnitedHealthcare CEO Brian Thompson was assassinated and bipartisan members of Congress pushed potentially far-reaching legislation to rein in pharmacy benefit managers, including OptumRx.
CEO Andrew Witty responded to the wrenching period, which included a public backlash against company practices, in a Jan. 16 earnings call, portraying the company as leading the way to a "less confusing, less costly" health care system.
With Congress taking aim at PBMs for contributing to higher drug costs, Witty announced the company would return 100% of rebates from drug companies back to its customers by 2028, up from 98% currently.
UnitedHealth projected higher medical costs in 2025, but stuck by its outlook for $450 billion to $455 billion in revenue and adjusted earnings of $29.50 to $30 a share. Management also touted strong results from annual enrollment periods, saying it will serve an extra 1.9 million people this year.
In response to another recent Journal story, UnitedHealth said on Feb. 13 that it pays 98% of all eligible claims.
UNH Stock Slammed Again
On Friday, UNH stock undercut December's lows, tumbling 8.6% to 459.21. That's not far off April's two-year low.
HUM sank 4.6%, while CVS is down 1.7%.
