UnitedHealth Group is under investigation by the U.S. Department of Justice for alleged criminal healthcare fraud, according to The Wall Street Journal, citing anonymous sources familiar with the investigation.
Those sources claim the federal probe is focusing largely on UHG's business practices surrounding Medicare Advantage, although the nature of the allegations remains unclear.
Shares in the company tumbled 16% when the probe was revealed, hitting a five-year low on Thursday, according to Reuters. While details of the probe remain limited, the news has heightened investor concerns.
A UHG spokesperson said the company was unaware of any investigation by the DOJ.
"We have not been notified by the Department of Justice of the supposed criminal investigation reported, without official attribution, in the Wall Street Journal today," UHG said. "The WSJ's reporting is deeply irresponsible, as even it admits that the 'exact nature of the potential criminal allegations is unclear.' We stand by the integrity of our Medicare Advantage program."
In February, WSJ reported on a civil Medicare fraud investigation into the company, but UHG dismissed the report at the time, saying it wasn't aware of a new investigation.
A March 11 email from a company lawyer, which was included in a lawsuit by an investor, warned a former UnitedHealth employee that the government was asking about the Medicare billing practices of UHG's health services arm, Optum. That email described the civil investigation as being in the "early stages" and cautioned the ex-employee that the government might reach out and attempt to make contact.
WHAT'S THE IMPACT
Adding to the turbulence is CEO Andrew Witty's decision to step down in October. Witty will be replaced by Stephen J. Hemsley, who served as company CEO from 2006-2017.
UnitedHealth Group has been facing a litany of legal woes. In February, a federal judge dismissed five out of seven counts in a class action lawsuit against the company but is allowing it to continue, with the suit claiming that UHG, UnitedHealthcare and naviHealth denied claims by using an artificial intelligence program instead of medical professionals in Medicare Advantage plans.
The plaintiffs are members who were denied benefit coverage. They claim in the lawsuit that the use of AI to evaluate claims for post-acute care resulted in denials, which in turn led to worsening health for the patients and in some cases resulted in death.
In November, the DOJ sued UnitedHealth Group and Amedisys over their planned merger due to anticompetitive concerns. UnitedHealth and Amedisys are direct competitors. The proposed merger between UnitedHealth and Amedisys would forever eliminate that competition, the DOJ said.
It would result in UnitedHealth's control of 30% or more of the home health or hospice services in eight states, according to the lawsuit. Also, the merger would result in the nation's three largest home health providers being owned by the two of the largest Medicare Advantage insurers in the country, UnitedHealthcare and Humana. Humana purchased home health and hospice company Kindred in 2021.
Also in November, orthopedic providers filed a lawsuit against Elevance, UnitedHealthcare and other insurers alleging they entered a multibillion-dollar price-fixing scheme with MultiPlan. The complaint claims the scheme was aimed at suppressing payment rates to doctors for out-of-network services.
THE LARGER TREND
Another lawsuit filed last week against UnitedHealth Group claims the healthcare company misled investors about its financial outlook following the murder of then-CEO Brian Thompson, who in December was killed by a gunman while attending the company's annual investor day in New York.
The suit accuses UHG of allegedly hiding a corporate strategy to deny medical care and downplaying the impact of Thompson's murder on the business. That harmed shareholders, according to the lawsuit, which was filed by a group of shareholders and is now seeking class action status.
Plaintiffs argued that UHG's financial guidance, released prior to Thompson's death, became obsolete once Thompson had died, and yet the insurer reiterated that financial guidance at the start of this year.
In April UHG cut its earnings guidance due to unexpectedly higher care costs in its Medicare Advantage business. "Heightened care activity indications" in its Medicare Advantage business cropped up, particularly in physician and outpatient services, leading the company to cut its outlook to net earnings of $24.65 to $25.15 per share for the year, and adjusted earnings of $26 to $26.50 per share (down from $28.15 to $28.65 and $29.50 to $30, respectively).
UHG also attributed the mixed performance to unexpected changes in Optum Health members' profiles, which will affect reimbursement this year "due to unexpectedly minimal 2024 beneficiary engagement by plans exiting markets."
Jeff Lagasse is editor of Healthcare Finance News.
Email: jlagasse@himss.org
Healthcare Finance News is a HIMSS Media publication.