UnitedHealth Group shares plunged over 10% in pre-market trading Friday following reports that the Department of Justice (DOJ) launched a fraud investigation into its Medicare billing practices. Analysts suggest the probe could expose systemic issues in Medicare Advantage risk adjustment coding, a critical revenue stream for the insurance giant.
Federal investigators are scrutinizing whether UnitedHealth inflated patient risk scores to secure higher government payouts,according to anonymous sources cited by The Wall Street Journal. Medicare Advantage plans receive additional funds for treating patients with complex conditions—a system critics claim incentivizes exaggerated diagnoses.
UnitedHealthcare, the company’s insurance arm:
- Covers 7.8 million Medicare Advantage enrollees
- Faces ongoing strain from rising healthcare costs
- Suffered 2023 profit declines due to post-pandemic care demand
This probe compounds existing challenges stemming from December’s tragic shooting of CEO Brian Thompson. The event erased $100+ billion in market value amid leadership instability concerns. Competing insurers like Humana also saw shares dip Friday, signaling sector-wide anxiety.
For consumers, the investigation raises questions about billing transparency and potential disruptions to Medicare Advantage services. UnitedHealth has not commented publicly, but insiders suggest an internal audit is underway to address compliance gaps.
