UnitedHealth Group (UNH-7.15%) is facing a civil fraud investigation by the U.S. Department of Justice (DOJ) over its Medicare billing practices. The probe focuses on how the company records diagnoses that lead to increased payments for its Medicare Advantage plans, according to a report from The Wall Street Journal.
Following the news, UnitedHealth’s stock fell nearly 9% during Friday morning trading.
In response, UnitedHealth stated, “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.” The company also denied allegations of fraudulent practices, calling them “outrageous and false.”
The DOJ has not provided an official comment on the investigation.
Medicare Advantage plans involve the U.S. government paying private insurers a fixed amount to manage enrollees’ healthcare. Payments increase when patients are diagnosed with specific conditions. Last year, The Wall Street Journalpublished articles highlighting that UnitedHealth received billions of dollars in payments linked to questionable diagnoses. An analysis of Medicare records showed a notable rise in lucrative diagnoses among patients treated by UnitedHealth-employed doctors after enrolling in the company’s Medicare Advantage plans.
Doctors interviewed by the Journal reported being trained to document diagnoses that generate higher revenue. They also claimed the company used software that suggested certain conditions and offered financial incentives for considering those diagnoses.
Justice Department attorneys have been interviewing medical providers named in the Journal’s reports, with the latest interviews conducted on January 31.
This investigation is distinct from the DOJ’s ongoing antitrust probe into UnitedHealth and its successful effort to block the company’s $3.3 billion acquisition of home health firm Amedisys last year.
UnitedHealth Group operates UnitedHealthcare, the largest health insurer in the United States, and Optum, which runs an extensive network of medical practices and pharmacy benefit services. The investigation adds to a difficult period for the company, which recently dealt with a cyberattack on its subsidiary, Change Healthcare, and faced criticism over insurance claim denials following the murder of UnitedHealthcare CEO Brian Thompson.
