UnitedHealth Group’s Stock Takes a Dive Amid Medicare Investigation
UnitedHealth Group’s shares dropped sharply on Thursday after news broke about an investigation into potential Medicare fraud involving the company.
The Justice Department is reportedly looking into whether CEO Andrew Witty’s company manipulated Medicare Advantage claims to boost federal payments by inflating risk scores for patients, according to The Wall Street Journal.
This investigation, which had been ongoing since last year but was not previously disclosed, led to a staggering 17% decrease in UnitedHealth’s stock price right after the market opened. Over the past month, shares have fallen by more than 50%.
Sources indicate that the DOJ’s Criminal Medical Fraud Unit is overseeing the case, with prosecutors from New York taking the lead.
UnitedHealth recently faced turmoil following the murder of executive Brian Thompson last year and stated that they had not been informed about this latest investigation.
A spokesperson emphasized, “We support the integrity of the Medicare Advantage program.” Meanwhile, the Justice Department declined to comment, and UnitedHealth is being asked for further statements.
This situation adds to the growing scrutiny on companies that have been previously involved in civic and antitrust investigations.
Aside from the executive issues, UnitedHealth is grappling with the consequences of a cyberattack that disrupted services nationwide.
In December, the CEO of UnitedHealthcare, a subsidiary of UnitedHealth, was shot in Manhattan, with investigations pointing to alleged mob ties.
Reports from February indicated that UnitedHealth was under civil investigations concerning fraudulent claims within the Optum division.
During that time, the company dismissed the allegations as “misinformation,” insisting they were unaware of the probe. However, an internal email from a lawyer at UnitedHealth later acknowledged that “the government has asked us some questions about Optum’s coding practices,” characterizing the inquiry as being in its “early stages.”
Traditionally, the DOJ’s healthcare fraud efforts have aimed at overbilling by providers, but it has recently turned its focus towards insurers managing Medicare Advantage plans.
These insurers receive higher payments for patients with severe health issues, which can create incentives for broader, sometimes questionable, diagnoses.
UnitedHealth has labeled these allegations as “inaccurate and biased,” defending their practices and arguing that Medicare Advantage plans yield better outcomes and lower costs compared to traditional Medicare.
Recent SEC filings show that a government audit is in progress, although they do not mention any specific ongoing criminal, civil, or antitrust investigations.
Additionally, UnitedHealth faces a civil whistleblower lawsuit that claims an internal audit misreported $2 billion worth of unsupported diagnoses. A court-appointed master recently recommended dismissal of the case due to lack of evidence, but the DOJ has urged the judge to reject that recommendation.
UnitedHealth countered that there was no evidence to support the DOJ’s claims of overpayments or wrongdoing on their part.
