(Bloomberg) – The U.S. Department of Justice is investigating the Medicare claims practices of UnitedHealth Group Inc., someone familiar with the issue said. The company’s shares fell sharply early on Friday.
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The Wall Street Journal first reported the investigation, saying it is considering whether the insurance giant’s practices related to patient diagnosis would force higher payments from the government’s Medicare Advantage program.
DOJ declined to comment when contacted by Bloomberg, and UnitedHealth did not immediately respond to requests for comment.
United Health stocks fell 12% at 9:06am in trading before the New York market opened. Other insurance companies followed suit. Elevance Health Inc. fell 3.8%, Humana Inc. slid 6%, and CVS Health Corp. also fell 5%.
The news is a disappointing addition to the company’s “difficult headline gusts” over the past few months, RBC analyst Ben Hendrix wrote in a note to investors. A long legal process.
The government is scrutinizing the costs of Medicare Advantage, a privately managed version of Medicare, a federal insurance program for the elderly. In its 2024 report, a key group advising Congress on Medicare policy raised concerns about how the program’s payment system could be operated and declared “urgent need for major overhauls.” did.
More than half of Medicare people benefit from the advantages of Medicare, a private program that gets paid from the US government. Every year, the plan submits huge data files to Medicare using diagnostic codes aimed at reflecting the illness of its members. These codes determine how much your insurance company will pay.
Insurers typically receive more payments for patients with more severe illnesses.
In recent years, the Biden administration has sought to constrain payments to Medicare Advantage plans, which lawmakers, watchdogs and whistleblowers accused of wasting tax money.
UnitedHealth has been undergoing intense scrutiny over the past few months. In December, the head of the insurance division was murdered on the way to an investor meeting. The shooting led to widespread public outcry from Americans over the frequency with which insurance companies refuse to provide medical care.
