UnitedHealth Group’s stock plunged Thursday morning after a report that the embattled insurance giant was being probed for Medicare fraud.
The Department of Justice has been conducting the criminal investigation into whether the company — which pushed out CEO Andrew Witty on Monday — manipulated Medicare Advantage billing practices to improperly increase federal payments by inflating patient risk scores, the Wall Street Journal reported on Wednesday
The existence of the probe, which began last year but had not been previously disclosed week, sent shares of UnitedHealth plummeting 17% after the opening bell. Shares have fallen more than 50% in the past month.
The Justice Department has been conducting a criminal investigation into UnitedHealth Group, according to a report. AP
The investigation is being overseen by the DOJ’s criminal healthcare fraud unit, with prosecutors based in New York leading the inquiry, sources told the Journal.
UnitedHealth, which was rocked last year by the execution-style killing of top executive Brian Thompson, said it had not been notified of the investigation.
“We stand by the integrity of our Medicare Advantage program,” a spokesperson said in a statement.
The Justice Department declined to comment. The Post has sought comment from UnitedHealth.
The revelation adds to mounting scrutiny of the company, which was already facing civil and antitrust investigations.
In addition to the CEO shake-up, UnitedHealth has been dealing with the fallout of a cyberattack that disrupted payments to providers nationwide and Thompson’s killing.
The Justice Department investigation has reportedly been focusing on possible Medicare fraud related to its Medicare Advantage operations. Christopher Sadowski
Last December, the CEO of UnitedHealthcare, a subsidiary which sells health insurance, was gunned down in Manhattan by alleged assassin Luigi Mangione.
In February, the Journal reported that UnitedHealth was under civil investigation for potentially fraudulent Medicare billing practices at its Optum division.
At the time, the company dismissed the story as “misinformation” and said it was unaware of any new probes.
However, an internal March 11 email from a UnitedHealth attorney, disclosed in a shareholder lawsuit, acknowledged that “the government has asked us some questions regarding Optum’s coding practices,” describing the inquiry as “in the early stages.”
The DOJ’s healthcare fraud unit, which traditionally focused on overbilling by providers, has in recent years shifted attention to insurance companies administering Medicare Advantage plans.
News of the investigation sent the company’s stock price plummeting by more than 17%. Google Finance
These insurers are paid more for covering patients with more severe conditions, creating an incentive to report extensive diagnoses –sometimes dubiously.
UnitedHealth has pushed back against allegations that it submitted inflated or unsupported diagnoses, calling such claims “inaccurate and biased.”
The company argues that Medicare Advantage delivers superior outcomes and lower costs than traditional Medicare.
The company’s most recent SEC filing notes ongoing governmental audits and investigations but does not explicitly mention the criminal, civil or antitrust probes now underway.
UnitedHealth also faces a civil whistleblower lawsuit accusing it of submitting $2 billion worth of diagnoses that internal audits found were not backed by medical records.
While a court-appointed special master recently recommended dismissing the case due to insufficient evidence, the DOJ has urged the judge to reject that recommendation.
UnitedHealth countered that the finding shows “there was no evidence to support the DOJ’s claims we were overpaid or that we did anything wrong.”
