UnitedHealth's building
UnitedHealth Group Inc. is responding to criminal and civil requests from the US Department of Justice about its Medicare practices, the company said, confirming reports of probes that have added to mounting challenges for the largest US health insurer.
The company is cooperating with the department and has “full confidence” in its practices, UnitedHealth said in a filing Thursday. The company contacted the Justice Department after reports of the investigations surfaced in the media, and received the requests after reaching out, the company said.
“The company has a long record of responsible conduct and effective compliance,” UnitedHealth said in the filing.
Shares fell 3.3% at the start of regular trading in New York on Thursday.
The acknowledgment of formal investigative requests is yet another setback for UnitedHealth. Earlier this year the company withdrew its financial outlook and replaced its CEO, citing higher-than-expected costs in its Medicare business.
The financial collapse came just months after a top executive was shot and killed, sparking public outcry over US health insurance practices.
Medicare strategy
UnitedHealth has put Medicare at the center of its strategy, both selling plans to seniors in its insurance unit and building out a vast clinic and home-care operation in its Optum division. It’s the largest provider of private Medicare Advantage plans with more than 8 million members.
As Medicare became a bigger business for health insurers in the last decade, watchdogs and whistleblowers have accused insurers of exaggerating how ill their patients are to boost profits.
Companies get paid more for taking care of sicker patients in the program, with rates determined by the diagnosis codes they submit.
Insurers across the industry have faced investigations into their Medicare Advantage billing, and some have paid settlements to resolve allegations of fraud. UnitedHealth has been fighting one Justice Department lawsuit, initiated by a whistleblower, for more than a decade and recently won a favorable finding in that case.
The Centers for Medicare and Medicaid Services has adjusted how it compensates insurers for some patient illnesses. Those changes to what’s known as the “risk model” have contributed to health insurers woes, and UnitedHealth executives have said they underestimated the impact of this change.
DOJ probes
Compounding the pressure on UnitedHealth, the company has been the subject of several Justice Department probes in recent years. The DOJ initiated an antitrust investigation into the company, which came to light in 2024. Then in May, the Wall Street Journal reported investigators had been looking into UnitedHealth’s Medicare Advantage business since at least last summer.
“We stand firmly behind the integrity of our Medicare Advantage business,” UnitedHealth said in a statement on its website in response to the Wall Street Journal story.
UnitedHealth shares have lost more than 40% this year through Wednesday’s close. The company lowered and then withdrew its annual guidance in the spring and appointed former chief executive officer and longtime board chair Stephen Hemsley to return as CEO.
At the company’s shareholder meeting in June, Hemlsey announced “a comprehensive review” of some of the company’s practices that have drawn the most public attention, including how it codes patients for risk scores that drive Medicare payments.
UnitedHealth is set to report second-quarter results next week and is expected to establish new financial targets for the year.
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