U.S. Investigates UnitedHealth Group’s Prescription Management Services
The criminal division of the U.S. Department of Justice is probing UnitedHealth Group Inc.’s prescription management services, specifically how the company reimburses doctors, according to sources familiar with the situation.
This area of inquiry, previously unreported, suggests that the investigation is broader than just potential Medicare fraud. Besides looking into doctor payments, investigators are examining business practices at Optum RX, the firm’s pharmacy benefits manager, as mentioned by individuals who preferred to remain anonymous regarding sensitive matters.
It’s important to note that the Justice Department has not accused UnitedHealth or its executives of fraud; simply having an inquiry doesn’t guarantee that any charges will follow.
Nonetheless, increased scrutiny over how UnitedHealth manages prescription profits and doctor reimbursements could exacerbate the company’s challenges.
As a result, UnitedHealth’s shares dipped by 1.5% at market close in New York, reversing earlier gains.
In a filing to Bloomberg back in July, UnitedHealth expressed confidence in its practices while acknowledging the investigations from the Department of Justice. The Department declined to comment on the ongoing situation.
Earlier reports from the Wall Street Journal indicated that the DOJ had been examining UnitedHealth’s Medicare Advantage claims practices since at least last summer. UnitedHealth is the largest provider of these private health plans for seniors, significantly contributing to growth in the health insurance market.
Additionally, the healthcare giant is facing scrutiny over potential private antitrust issues. The U.S. Federal Trade Commission has filed a lawsuit against the company, claiming that it unfairly benefitted pharmacy managers by increasing insulin prices at competing pharmacies. UnitedHealth’s Optum RX has dismissed the FTC’s allegations as “baseless.”
The DOJ is also conducting civil fraud investigations related to Medicare claims practices, which are separate from the criminal probe reported earlier in February.
In a July filing, UnitedHealth defended its track record of responsible conduct and compliance, referencing a positive audit from the Centers for Medicare and Medicaid Services, which points to progress in addressing long-standing Medicare fraud concerns.
Optum RX stands out as one of the top three pharmacy benefit managers in the U.S., providing mail order and specialty pharmacy services. Last year, this segment generated $133 billion in revenue. The Optum Health Care Division encompasses various healthcare facilities and home care services, employing around 135,000 various healthcare providers, including many directly employed by the company. Until recently, it was among the fastest-growing profit sectors for UnitedHealth.
This year, UnitedHealth’s shares have decreased by roughly 40%. In April, the firm missed its revenue targets for the first time in over a decade and subsequently adjusted its forecasts. CEO Andrew Whitty unexpectedly resigned in May, leading to the reinstatement of former CEO Stephen Hemsley as the board chair.
Hemsley is working to rebuild trust with investors and regulators, implementing management reforms that included new leadership in the Optum RX and Optum Health divisions. As part of this initiative, a new board committee was announced in August to enhance oversight. This “Public Responsibility Committee” will manage regulatory and reputational risks, focusing also on pharmacy interest management practices.
Recently, the company’s stock saw a boost when Warren Buffett’s Berkshire Hathaway disclosed it had acquired 5 million shares during the second quarter.
