UnitedHealth Group, America’s largest insurer, is facing yet another crisis. The company’s stock price (NYSE: UNH) plummeted in early trading this morning after a new report alleged that the private insurance provider is facing a probe from the U.S. Department of Justice (DOJ) over its Medicare billing practices, a claim UnitedHealth Group denies. Here’s what to know:
UnitedHealth’s Medicare billing practices
Shares in UnitedHealth Group fell this morning after the Wall Street Journal published a report stating that the $400 billion company was under investigation by the DOJ over its Medicare billing practices. The report states that the investigation is a civil fraud case and not a criminal one.
At the heart of the investigation are DOJ concerns that UnitedHealth is recording patient diagnoses that generate additional payments to its Medicare Advantage plans.
As the WSJ notes, UnitedHealth Group (aka UHG) and other insurers get lump sum payments from the federal government via the Medicare Advantage system. If patients have certain conditions, those lump sum payments can increase, generating more profit for insurers.
Fast Company reached out to the DOJ for comment.
The alleged investigation follows a December report from the WSJ in which the publication looked at billions of Medicare records. Those records allegedly showed that patients who joined Medicare Advantage plans saw “huge increases” in diagnoses that were more lucrative to UnitedHealth.
“Doctors said UnitedHealth . . . trained them to document revenue-generating diagnoses, including some they felt were obscure or irrelevant,” the Journal reported. “The company also used software to suggest conditions and paid bonuses for considering the suggestions, among other tactics, according to the doctors.”
In short, the DOJ may be concerned that UHG is trying to pad its bottom line by assigning unneeded diagnoses to patients in order to increase their taxpayer-fueled payments from the federal government.
Reached for comment by Fast Company, a UnitedHealth Group spokesperson sent the following statement:
“The Wall Street Journal continues to report misinformation on the Medicare Advantage (MA) program. The government regularly reviews all MA plans to ensure compliance and we consistently perform at the industry’s highest levels on those reviews. We are not aware of the “launch” of any “new” activity as reported by the Journal. We are aware, however, that the Journal has engaged in a year-long campaign to defend a legacy system that rewards volume over keeping patients healthy and addressing their underlying conditions. Any suggestion that our practices are fraudulent is outrageous and false.”
Yet another crisis for UHG
The alleged DOJ civil fraud investigation is the second major recent crisis for UnitedHealth Group. On December 4, a gunman fatally shot Brian Thompson, CEO of UHG’s UnitedHealthcare unit, as he arrived for an early-morning investors conference in midtown Manhattan.
Yet the murder of UnitedHealthcare’s CEO did not generate an outpouring of support for the company, as might be expected. Instead, it generated widespread glee on social media from Americans increasingly angry about the state of the country’s private healthcare industry, which many find unfair and unaffordable. That glee saw UnitedHealthcare and many other health insurers remove photos of their executives from their websites.
UnitedHealth received further scorn after UnitedHealth Group CEO Andrew Witty published an ill-received op-ed in the New York Times, which generated an outpouring of new responses from Americans conveying the challenges they’ve faced trying to get needed treatment—or getting UnitedHealth to pay for the treatment.
In the aftermath of Thompson’s killing and the public outcry from Americans about the struggles they’ve faced with UnitedHealthcare, UnitedHealth Group’s stock fell and hasn’t recovered since.
UNH shares fall again
Before the public outcry against UnitedHealthcare began in early December, the UnitedHealth Group’s stock price was trading at over $600 per share. By mid-December, it had fallen to below $500 per share.
Today, the company’s stock is even lower. As of the time of this writing, UNH shares are down nearly 9% on news of the alleged DOJ probe. Shares are currently trading below $460 each.
As of today’s fall, UNH shares are now down over 9.4% year-to-date. Over the past 12 months, UNH shares have fallen over 12%.