UnitedHealth shares drop as DOJ launches Medicare pricing probe
By Benjamin Chiou
Date: Friday 21 Feb 2025
(Sharecast News) - Shares in American insurance group UnitedHealth tanked on Friday after the news that the Department of Justice has launched an official probe into its Medicare billing practices.
According to the Wall Street Journal, a new civil fraud investigation started in recent months is looking at whether private insurers racked up billions in extra payments from the $450bn-a-year Medicare Advantage scheme.
The development follows a year-long investigation by the Journal, which concluded in December, into the billing practices by large insurance firms.
After studying billions of records of Medicare services, the Journal found that companies took extra payments from the government for false diagnoses that were never looked at by doctors.
In one example, tens of thousands of patients were reported to have had diabetic cataracts, thus triggering payments to insurers, even after receiving treatment that cured the condition.
The paper's investigation also claims to have found examples of insurers sending nurses to patients' homes to diagnose them with conditions that were not known by doctors, or by using questionable methods.
Doctors, meanwhile, were incentivised to find additional diagnoses for lucrative conditions, the Journal claims, with UnitedHealth-employed doctors trained to "document revenue-generating diagnoses, including some they felt were obscure or irrelevant".
In December, UnitedHealth hit back at the WSJ, saying that its "flawed" study relied on "often incomplete and inaccurate data".
UnitedHealth shares were down 11% at $447.71 in early dealings on Wall Street, with sector peers Humana, CVS Health and Cigna also under heavy selling pressure.
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