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UnitedHealth Group Shares Plunge Amid DOJ Investigation

Investigation Focuses on Medicare Billing Practices

Shares of UnitedHealth Group (UNH) experienced a significant decline of over 10% in trading on Friday, triggered by reports that the U.S. Department of Justice (DOJ) is investigating the company’s practices regarding Medicare billing.

According to a report from The Wall Street Journal, the DOJ is examining whether UnitedHealth has engaged in the practice of over-diagnosing medical conditions to secure higher payments from the Medicare Advantage program. This investigation follows previous allegations, reported in December, where sources indicated that healthcare providers felt pressured to document certain diagnoses that were often deemed obscure or irrelevant, for the purpose of increasing revenue.

Response from UnitedHealth Group

In reaction to the ongoing scrutiny, UnitedHealth has expressed strong criticism of The Wall Street Journal‘s coverage, claiming that the publication lacks a comprehensive understanding of the Medicare Advantage program. The company characterizes the reporting as one-sided and biased, emphasizing that the claims do not reflect the reality of its operational practices.

As of now, neither the DOJ nor UnitedHealth has provided a response to inquiries from Investopedia regarding the investigation.

Market Impact on Other Health Insurers

The effects of the DOJ’s investigation have extended beyond UnitedHealth, adversely impacting the stocks of other health insurance providers. Shares of CVS Health (CVS), The Cigna Group (CI), and Humana (HUM) also experienced declines following the news. UnitedHealth’s stock, having dropped 11% by Friday morning, is approaching its lowest opening figure since April of the previous year.

As this investigation unfolds, it could have significant implications for UnitedHealth and potentially reshape public perception of Medicare Advantage practices within the healthcare industry.

Source
www.investopedia.com