One unexpected reason UnitedHealth stock is falling this week
A big Medicare and Medicaid change will hurt UnitedHealth's bottom line.
The farther you pull back on UnitedHealth Group's (UNH) chart, the worse the picture gets.
The company announced May 13 that former CEO Stephen Helsmley, who held the position from 2006 to 2017, will replace CEO Andrew Witty.
This has been just the latest setback for a stock facing prolonged tumult. If you pull back to a month, shares are down 30%. If you pull back six months, shares are down 50%. If you pull back a full year, shares are down 43%.
Related: UnitedHealth Group stock tumbles; Andrew Witty steps down as group CEO
The health care provider has been in trouble for some time, but things got worse last week when the stock dropped to a five-year low upon the sudden departure of Witty.
Recent reports revealed the company was being investigated for potential Medicare fraud, and this week a report in The Guardian alleged that the company paid secret bonuses to nursing homes for treating residents in-house instead of sending them to hospitals.
The move helped UnitedHealth lower costs, but also potentially put patients' health at risk, according to the report.
While Medicare, the government program that subsidizes health care for seniors, and Medicaid, the government program that subsidizes health care for lower-income Americans, are in the news due to the cuts made in President Donald Trump's just-passed budget, the government entity overseeing those programs made an announcement that is bound to cost UnitedHealth more money. 
Centers for Medicare & Medicaid Services take drastic measures to fight fraud
The Centers for Medicare & Medicaid Services, the federal agency that oversees the Childrens Health Insurance program and the Health Insurance Marketplace along with Medicare and Medicaid, announced that it will be renewing its focus on audits.
It announced Wednesday a significant expansion of its auditing manpower for Medicare Advantage plans, starting immediately. The agency hopes to clear its backlog of payment audits running from 2018 through 2024.
“We are committed to crushing fraud, waste, and abuse across all federal health care programs,” said CMS Administrator Dr. Mehmet Oz. “While the Administration values the work that Medicare Advantage plans do, it is time CMS faithfully executes its duty to audit these plans and ensure they are billing the government accurately for the coverage they provide to Medicare patients.”
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Medicare Advantage is a government program that bundles hospital and medical coverage into one plan and typically utilizes a network of doctors and hospitals.
The plans receive risk-adjusted payments based on the diagnoses submitted for enrollees. This means patients with serious or chronic conditions receive higher payouts.
But the agency has not been able to verify the legitimacy of years' worth of claims, despite there being estimates that the agency is overbilled by about $17 billion annually.
CMS plans to hire about 2,000 medical coders by September in order to get the job done. The agency currently has only 40.
UnitedHealth blamed "heightened care activity indications within UnitedHealthcare’s Medicare Advantage businesses" for its dismal quarter. If the CMS audit is rigorous, the company could lose even more money.
UnitedHealth misses earnings, revenue estimates
Last month, UnitedHealth reported weak first-quarter earnings, lowered its full-year profit guidance and missed on revenue estimates for the period.
After lowering its full-year guidance during the earnings release, the company decided to completely yank its guidance last week.
In April, UNH said adjusted earnings for the three months ending in March came in at $7.20 a share, a 1.7% increase from the same period last year but 9 cents shy of the Wall Street consensus forecast.
Group revenues rose 9.5% from last year to $109.6 billion, the company said, again missing analysts' consensus estimate of a $111.6 billion tally.
Optum revenues rose 4.6% from a year earlier to $63.9 billion. The division, which UnitedHealth purchased in 2011, is the main driver of the group's earnings. It's the nation's largest physician employer, with around 90,000 doctors under its wing.
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