File Photo: The UnitedHealthcare logo, listed company of Down Jones Industrial Aledge Market Index, will be displayed on April 13, 2016 in Cypress, California.
Mike Blake | Reuters
UnitedHealthcare is back in hot water as the insurance giant is working on a reported government investigation into Medicare claims practices.
These recent developments will expand the past year for the parent company. UnitedHealth Groupmarked by the killing of top executives, costly cyberattacks against its subsidiaries, and high health costs in the insurance sector. UnitedHealth Group is the largest medical conglomerate in the United States based on revenue and its market capitalization of over $420 billion, and UnitedHealthcare is the largest private insurance company in the country.
UnitedHealth Group stocks have fallen over 20% in the past three months.
The stock also fell 7% on Friday, following a report on probes first reported by the Wall Street Journal. According to the newspaper, the Department of Justice has launched a civil fraud investigation in recent months of United Health claims practices on Medicare Advantage Plans.
The probe will specifically examine whether diagnosis was routinely made to trigger additional payments in these plans, such as insured-owned groups of physicians, the journal said. After a series of articles in the newspaper last year, Medicare reported that it had paid UnitedHealth billions of dollars for a suspicious diagnosis.
The Medicare Advantage Plan is provided by private insurance companies that are paid fees set by the government to manage healthcare for seniors looking for additional benefits not covered by traditional Medicare. These plans have been a source of high healthcare costs across the wider insurance industry last year.
In a statement, UnitedHealth called the journal’s report “misinformation” and said that when it comes to government compliance reviews for the Medicare Advantage Plan, the company consistently performs at the “highest level” of the industry.
“The proposal that our practices are fraudulent is outrageous and false,” the company said.
In a research note on Friday, RBC Capital Market analyst Ben Hendrix called the reported survey “a progressive overhang,” but it was “a long process and, in our view, in the short term.” It is unlikely to cause material financial headwinds.” He pointed to an investigation last year that DOJ put into Optum RX, the company’s subsidiary, for potential antitrust violations.
Two days after CNBC first reports on the probe, the report on the probe first reported that UnitedHealthCare is offering acquisitions to employees and can pursue layoffs if the resignation quota is not met It was held two days later. This move comes as companies try to cut costs through efforts such as leveraging digital technology.
And earlier this month, Ackman, one of the world’s most prominent investors, said he was in a dispute with UnitedHealth Group over her claim that the company had pulled her out of surgery to justify patient care. He publicly pledged to cover the legal costs of the doctor.
Ackman, CEO of Pershing Square Capital Management, later knocked down an X post that was critical to the insurer after telling him that the doctor’s claim that UnitedHealth’s lawyers had amplified it on social media was not true. Ackman said he has no position in UnitedHealth.
He filed a lawsuit with the Securities and Exchange Commission to investigate the company, suggesting that the insurance company’s “profitability is highly exaggerated due to its refusal to medically necessary procedures.”
This is similar to the public blowback the company faced after the murder of United Healthcare CEO Brian Thompson in December. It unleashes a wave of anger and responsiveness against the insurance industry and updates the demand for reform to prevent denial of care.
UnitedHealth is still working on fallout from cyberattacks at Change Healthcare, a subsidiary that handles medical claims. The cyberattack has damaged approximately 190 million protected health information, and UnitedHealth has paid more than $3 billion to affected providers.
UnitedHealth says it has been spotting a cyberattack on Friday day for a year ago.
