Shares of UnitedHealth Group got battered again Wednesday morning on a report that it paid kickbacks to nursing homes to reduce costly hospital transfers.
The Guardian reported that UnitedHealthcare paid thousands of dollars in bonuses to facilities as part of a cost-cutting drive to reduce hospital transfers for sick patients, a move that may have put patient health at risk.
Reducing hospital transfers saves money by leading to fewer readmissions and ER visits. Insurers give financial incentives for improved patient outcomes that lead to reductions in transfers and readmission rates.
According to the Guardian, the payments were linked to a company program under which its own medical teams were operating from nursing homes, helping the facilities to cut expenses attributed to its enrollees, according to Reuters.
The report was based on thousands of secret corporate and patient records and two whistleblower declarations presented to Congress this month. More than 20 current and former UnitedHealth and nursing home employees also gave details of the alleged practices, Reuters said.
UnitedHealth Group released a statement on The Guardian report saying: "The U.S. Department of Justice investigated these allegations, interviewed witnesses and obtained thousands of documents that demonstrated the significant factual inaccuracies in the allegations. After reviewing all the evidence during its multi-year investigation, the Department of Justice declined to pursue the matter."
WHY THIS MATTERS
The allegations add another layer to recent ongoing troubles for the corporate giant and nation's largest insurer.
UnitedHealth's shares dropped after the abrupt resignation last week of its former CEO, Andrew Witty, following disappointing Q1 earnings in April.
UnitedHealth's stock dropped 23% after what Witty called an "unusual and unacceptable" performance. Higher medical costs and utilization led the reasons for the decline. The company suspended its full-year financial forecast as it replaced Witty with former CEO Stephen Hemsley.
But trouble was only beginning last week. The Wall Street Journal reported that UnitedHealth was under investigation by the U.S. Department of Justice for alleged criminal Medicare fraud.
Stocks again slid. HSBC, Hongkong and Shanghai Banking Corporation and other investment bankers have reportedly downgraded the stock.
THE LARGER TREND
Hemsley has bought $25 million worth of company shares, adding to recent insider purchases as its stock plunged over 20% this week, according to Seeking Alpha.
In February 2024, the Change ransomware attack disrupted claims processing for virtually all hospitals and providers and affected an estimated 190 million people. Witty was grilled before Senate and House committees on how the cyberattack could have happened to Change, a company UnitedHealth purchased in 2022 for $13 billion after a legal battle with the Department of Justice.
Email the writer: SMorse@himss.org