US Justice Department Investigates UnitedHealth Group’s Medicare Billing Practices
The U.S. Justice Department is investigating UnitedHealth Group’s Medicare billing practices, according to a Bloomberg report, citing a source familiar with the matter. This civil fraud investigation is examining whether the company’s patient diagnosis practices lead to inflated payments from the government’s Medicare Advantage program.
UnitedHealth’s shares fell sharply, closing down 7.2% following the news. Humana Inc., another major player in the Medicare market, also experienced a decline, dropping by 5.7%.
The Justice Department declined to comment on the investigation, according to Bloomberg. UnitedHealth, however, refuted the report, stating in an emailed response, “We are not aware of the ‘launch’ of any ‘new’ activity. Any suggestion that our practices are fraudulent is outrageous and false.”
This isn’t the only legal scrutiny UnitedHealth is facing. The Justice Department is also engaged in a broad antitrust investigation into the company’s business practices, which began during the Biden administration. This initial inquiry focused on UnitedHealth’s acquisitions of healthcare providers and data companies. The antitrust investigation will now be overseen by Gail Slater, the antitrust chief nominee under Donald Trump, pending Senate confirmation. It remains unclear if the new Medicare billing investigation and the previously launched antitrust inquiry are connected.
Medicare Advantage Under Scrutiny
Morningstar analyst Julie Utterback described the market’s reaction to the news as a potential “overreaction,” given the scale of UnitedHealth’s Medicare Advantage business compared to its overall operations. “But when you look at what’s happening…regulators may be more emboldened than usual to take action on companies like this that perhaps are milking the system, if you will,” Utterback said.
The government’s careful review of costs within Medicare Advantage, the privately administered version of Medicare, continues. A congressional advisory group on Medicare policy expressed concerns about the program’s payment structure in a 2024 report, calling for significant reforms. More than half of the Medicare beneficiaries are currently enrolled in Medicare Advantage, where private insurers receive government payments based on diagnostic codes submitted annually. Insurers gain higher payments for patients with more severe conditions.
In recent years, the Biden administration sought to limit payments to Medicare Advantage plans after lawmakers, government watchdogs, and whistleblowers raised concerns about potential misuse of funds.
UnitedHealth in the Spotlight
UnitedHealth has faced increased scrutiny in recent months. In December, Brian Thompson, head of the company’s insurance division, was shot and killed while en route to an investor conference. The incident sparked public discussion regarding insurers’ handling of medical care denials. In an unrelated case, Luigi Mangione, charged in Thompson’s killing, appeared in court. His attorney reported that federal prosecutors were still debating the death penalty.
Earlier this month, UnitedHealth shares declined after billionaire investor Bill Ackman suggested in a post on X (formerly Twitter) that the company overstated its profits. The post referenced a doctor who had to pause medical care to handle a call from the insurer. UnitedHealth responded that a hospital error had led to the call and subsequently informed the U.S. Securities and Exchange Commission about Ackman’s deleted post.
