UnitedHealth stock plunges on report of DoJ Medicare Advantage probe

UnitedHealth, still reeling from the murder of one of its top executives, is reportedly facing a Department of Justice investigation.

Feb 21, 2025 - 14:15

UnitedHealth stock plunges on report of DoJ Medicare Advantage probe

UnitedHealth Group shares fell sharply in early Friday trading following a report that the U.S. Department of Justice has launched a probe into the health insurance giant's Medicare Advantage practices.

The Wall Street Journal said the investigation will center around UnitedHealth's (UNH) diagnosis recordings that trigger extra Medicare Advantage payments but aren't followed-up with actual patient care.

Last year, a report from the Office of Inspector General for the Department of Health and Human Services said UnitedHealth, as well as other Medicare Advantage insurers, collected $7.5 billion in dubious payments in 2022 tied to health risk assessments (HRAs), with UnitedHealth taking in $3.7 billion.

"The lack of any other follow-up visits, procedures, tests, or supplies for these diagnoses in the (Medicare Advantage) encounter data for 1.7 million enrollees raises concerns that either: (1) the diagnoses are inaccurate and thus the payments are improper or (2) enrollees did not receive needed care for serious conditions reported only on HRAs or HRA-linked chart reviews," the report stated.

*UnitedHealthcare CEO Brian Thompson was murdered before a group investor conference in Manhattan late last year.*
UnitedHealthcare Group website/TheStreet

Reports of the DoJ probe come shortly after UnitedHealthcare CEO Brian Thompson was shot and killed outside a hotel in Manhattan last year while heading to a group investor conference.

Luigi Mangione, a 26-year old from Maryland, was arrested shortly after and charged with "methodically planning when, where, and how to carry out his crime" by the DoJ in December.

The killing unleased a torrent of attacks from Americans who are upset over the role that health insurance groups and pharmacy benefit managers play in the U.S. healthcare system.

The U.S. Federal Trade Commission added to that pressure earlier this week when it accused the three largest PBMs of inflating the cost of medicines, sometimes prescribed for serious illnesses such as heart disease, cancer and HIV, and reaping more than $7.3 billion in extra profits.

Witty, for his part, addressed the ongoing debate over the role of PBMs in the U.S. healthcare system.

"There are participants in this business that benefit from high prices," he told investors on a conference call. "American consumers pay disproportionally more (for some drugs such as GLP-1s) than people from other countries. PBMs play a vital role in holding those prices down."

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Earlier this year, the group posted revenues of more than $100.8 billion for the three months ending in December, the most on record, with revenues from its Optum health insurance division rising to $65.1 billion.

UnitedHealth shares were last marked 10% lower in premarket trading to indicate an opening bell price of $452.40 each.

Health insurance rivals Cigna Group (CI) and Humana (HUM) were marked 2% and 4.24% lower respectively, while CVS Health (CVS) fell 3.2%,