UnitedHealth Group experienced a significant decline in its stock price on Friday as news emerged that the U.S. Department of Justice is investigating the healthcare conglomerate’s Medicare billing practices.
According to a report from The Wall Street Journal, federal officials have initiated a civil fraud inquiry into how the company records diagnoses that may lead to additional payments for its Medicare Advantage (MA) plans. These plans are privately operated alternatives to the government’s Medicare program, primarily serving individuals aged 65 and older.
Citing unnamed sources, the publication noted that this investigation is centered around billing tactics that have been under scrutiny in recent months.
UnitedHealth responded by stating they were not aware of any new developments related to the purported investigation and condemned the Journal’s article. In a public statement on their website, the company asserted, “Any suggestion that our practices are fraudulent is outrageous and false.”
As the largest provider of Medicare Advantage plans, UnitedHealthcare serves over 7.8 million individuals. The segment has faced challenges in recent quarters due to an increase in healthcare utilization and cuts to reimbursement rates.
According to Whit Mayo, an analyst at Leerink Partners, the report adds to existing concerns about intensified scrutiny on insurers—especially concerning Medicare Advantage—which could pressure their business practices, financial performance, and investor confidence.
On the same day, shares for UnitedHealth Group, based in Minnetonka, Minnesota, plummeted by over 6%. Not only did UnitedHealth suffer, but other major Medicare Advantage providers, such as Humana, also saw their stock prices fall, coinciding with a broader market decline.
Since early December, shares of UnitedHealth Group have faced a downward trend, worsened by the tragic incident involving UnitedHealthcare’s CEO, Brian Thompson, who was fatally shot in Manhattan while heading to the company’s annual investor meeting. The suspect, identified as 26-year-old Luigi Mangione, has been involved in a five-day manhunt and appeared in court for the first time since his arraignment on murder and terrorism charges.
In the wake of Thompson’s death, the company’s stock lost more than $100 in value over the following weeks, as public discontent towards insurance companies intensified.
