The US Justice Department is investigating UnitedHealth Group’s Medicare billing practices, Bloomberg reported, citing a person familiar with the matter.
The Wall Street Journal first reported the civil fraud investigation, which is examining whether UnitedHealth’s patient diagnosis practices result in higher payments from the government’s Medicare Advantage program.
Shares of UnitedHealth fell 7.2% upon market close, while Humana Inc., which also has a significant Medicare business, dropped 5.7%.
The Justice Department declined to comment, according to Bloomberg. Meanwhile, UnitedHealth disputed the report, stating in an emailed response, “We are not aware of the ‘launch’ of any ‘new’ activity. Any suggestion that our practices are fraudulent is outrageous and false.”
The Justice Department is also conducting a broad antitrust investigation into UnitedHealth’s business practices. That inquiry, which began during the Biden administration, has focused on UnitedHealth’s acquisitions of healthcare providers and data companies, according to a previous Bloomberg report. The investigation will now be overseen by Trump’s antitrust chief nominee, Gail Slater, who is awaiting Senate confirmation.
It remains unclear whether the Medicare billing investigation is connected to the antitrust inquiry.
Morningstar analyst Julie Utterback described UnitedHealth’s stock decline as a possible “overreaction,” given the size of the company’s Medicare Advantage business compared to its overall operations.
“But when you look at what’s happening post-shooting and in the DOGE era, regulators may be more emboldened than usual to take action on companies like this that perhaps are milking the system, if you will,” Utterback said.
The government has been reviewing costs within Medicare Advantage, the privately administered version of Medicare. A congressional advisory group on Medicare policy raised concerns about the program’s payment structure in a 2024 report, calling for significant reforms.
More than half of Medicare beneficiaries are enrolled in Medicare Advantage, where private insurers receive government payments based on diagnostic codes submitted annually. Insurers receive higher payments for patients with more severe conditions.
In recent years, the Biden administration sought to limit payments to Medicare Advantage plans following concerns raised by lawmakers, watchdogs, and whistleblowers over potential misuse of funds.
UnitedHealth has been in the spotlight in recent months. In December, Brian Thompson, head of the company’s insurance division, was shot and killed while heading to an investor conference. The incident sparked public discussion about insurers’ handling of medical care denials.
Luigi Mangione, charged in Thompson’s killing, appeared in a New York courtroom Friday. His attorney stated that federal prosecutors are still considering the death penalty.
Earlier this month, UnitedHealth shares declined after billionaire investor Bill Ackman suggested in a now-deleted post on X that the company overstated its profits. The post referenced a doctor who had to pause medical care to handle a call from the insurer. UnitedHealth responded that a hospital error had led to the call and stated it had contacted the US Securities and Exchange Commission regarding Ackman’s deleted post.
