UnitedHealth Shares Puke As DoJ Launches Medicare Billing Practice Probe

Shares of UnitedHealth Group plunged in premarket trading after a Wall Street Journal report revealed that the Justice Department had launched a civil fraud investigation into the healthcare group’s billing practices, specifically examining how it records diagnoses that increase government payments to its Medicare Advantage plans.

The probe follows a series of WSJ reports last year that showed Medicare paid UnitedHealth billions for questionable diagnoses. DoJ attorneys recently interviewed medical providers cited in those articles. 

This investigation adds to mounting scrutiny of the $460 billion healthcare giant, which is also facing an antitrust probe and a DoJ lawsuit to block its $3.3 billion acquisition of home-health company Amedisys. 

UnitedHealth shares tumbled nearly 10% in premarket trading in response to WSJ’s report. Shares are down nearly 25% since Luigi Mangione, the 26-year-old accused of killing UnitedHealthcare CEO Brian Thompson in early December in Manhattan. 

Here’s more from WSJ’s report:

In December, the Journal reported that its analysis of billions of Medicare records showed that patients examined by UnitedHealth-employed doctors had huge increases in lucrative diagnoses after joining the company’s Medicare Advantage plans.

Doctors said UnitedHealth, based in the Minneapolis area, trained them to document revenue-generating diagnoses, including some they felt were obscure or irrelevant. The company also used software to suggest conditions and paid bonuses for considering the suggestions, among other tactics, according to the doctors.

Last summer, the Journal also reported that UnitedHealth added diagnoses to patients’ records for conditions that no doctor treated, which triggered an extra $8.7 billion in federal payments in 2021… 

Dow futures also tumbled on the news, as UnitedHealth is the second-largest contributor to the main equity index.

“When you find two cockroaches, it is almost a certainty that there are many more. And a half a trillion market cap for a health insurer makes no sense. I expect that there are many whistleblowers who have shared their work with the government and that more will be inspired to do so,” Bill Ackman wrote on X. 

When a company, in this case United Healthcare, attacks its critics, the probability that it has committed fraud or is guilty of a crime increases substantially. This morning the DOJ announced an investigation into UNH’s Medicare billing practices. The DOJ did not do this… https://t.co/BX3WtYzRJi

— Bill Ackman (@BillAckman) February 21, 2025

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