The UnitedHealth logo on a laptop arranged in New York, US, on Friday, July 7, 2023.
Gabby Jones | Bloomberg | Getty Images
UnitedHealth Group revealed Thursday it is facing a Justice Department investigation over its Medicare billing practices, adding to a string of setbacks for a company that owns the nation’s largest and most powerful private insurer.
In a securities filing, the company said it has started complying with formal criminal and civil requests from the DOJ, and that it reached out to the department after reports of the probes surfaced. UnitedHealth also said it has launched a third-party review of its business policies and performance metrics.
The company told CNBC that it expects to complete that review towards the end of the third quarter.
In the filing, UnitedHealth said it “has full confidence in its practices and is committed to working cooperatively with the Department throughout this process.”
UnitedHealth Group shares dropped around 3% in premarket trading Thursday. The company’s executives will likely face questions about the probe during its second-quarter earnings call on July 29.
Jared Holz, Mizuho Securities health care strategist, said in an email to clients on Thursday that the announcement is “not shocking,” but noted that the company previously denied DOJ investigation claims. He said UnitedHealth’s decision to admit to the probe and cooperate with the department “all sounds logical as it moves forward with a new CEO.”
The company announced the abrupt departure of former CEO Andrew Witty in May.
UnitedHealth’s announcement on Thursday comes after the Wall Street Journal reported in May that the Department of Justice is conducting a criminal investigation into the health-care giant over possible Medicare fraud. In response at the time, the company said it stands “by the integrity of our Medicare Advantage program.”
In July, the Journal also reported that the DOJ interviewed several doctors about UnitedHealth’s practices and whether they felt pressured to submit claims for certain conditions that bolstered payments from the Medicare Advantage program to the company.
That marked the second time this year that the insurer’s Medicare Advantage business has come under federal scrutiny. The Journal also reported in February that the DOJ is conducting a civil investigation into whether the company inflated diagnoses to trigger extra payments to its Medicare Advantage plans.
But on Thursday, UnitedHealth said independent audits by the Centers for Medicare and Medicaid Services “confirm” that the company’s practices are “among the most accurate in the industry.”
UnitedHealth also pointed to a special master’s recommendation in March in favor of the company in a yearslong legal battle with the DOJ that began with a whistleblower who alleged the company illegally withheld at least $2 billion through the Medicare Advantage program. The special master assigned to the case by a judge said the DOJ lacked evidence.
UnitedHealthcare’s Medicare and retirement segment, which includes the Medicare Advantage business, is UnitedHealth Group’s largest revenue driver, raking in $139 billion in sales last year.
The update in the probe comes after a tumultuous last year for UnitedHealthcare. Shares of UnitedHealthcare’s parent company, UnitedHealth Group, are down more than 42% for the year after it suspended its 2025 forecast amid skyrocketing medical costs, announced the surprise exit of Witty and grappled with the reported probe into its Medicare Advantage business.
The company’s 2024 wasn’t any easier, marked by a historic cyberattack and the torrent of public blowback after the murder of UnitedHealthcare’s CEO Brian Thompson.
— CNBC’s Bertha Coombs contributed to this report.
