U.S. health care company, UnitedHealth, experiences a stock drop following its disclosure of a federal investigation by the Department of Justice (DOJ) into potential fraudulent activities within its Medicare business operations.
In a significant development, UnitedHealth Group, the nation's largest provider of Medicare Advantage plans, is currently under investigation by the U.S. Department of Justice. The investigation, reportedly initiated earlier this year, focuses on the company's billing practices in recent months, particularly how diagnoses are recorded to secure extra payments for its Medicare Advantage plans.
The Department of Justice's inquiry comes as UnitedHealth Group prepares to report its second-quarter results next Tuesday. The company, which covers more than 8 million people through its UnitedHealthcare business, operates one of the nation's largest health insurance and pharmacy benefits management businesses. Last year, it reported over $400 billion in revenue, ranking it as the third-largest company in the Fortune 500.
The investigation, as reported by The Wall Street Journal, also involves how UnitedHealth Group used doctors and nurses to gather diagnoses that could potentially bolster payments. This allegation adds to the pressures the company has been facing in recent quarters due to rising care use and rate cuts.
UnitedHealth Group has been cooperating with federal investigators in both criminal and civil investigations. The company initiated contact with the Department of Justice following media reports about investigations into its Medicare program participation.
The investigation has had an impact on UnitedHealth Group's shares. Since December, the company's shares have mostly shed value, with a significant drop in April due to a spike in health care use. On Thursday, the shares slipped further. However, it's important to note that the company's share price reached a new all-time high of $630 last year.
The shooting of UnitedHealthcare CEO Brian Thompson in December has also been a challenging event for the company. A 26-year-old suspect, Luigi Mangione, has been charged in connection with Thompson's shooting.
UnitedHealth Group's Optum business, which provides care and technology support, continues to operate as usual. Medicare Advantage plans, privately run versions of the government's Medicare coverage program mostly for people ages 65 and over, remain a significant part of the company's operations.
As the investigation unfolds, UnitedHealth Group will need to address these allegations and demonstrate its commitment to transparency and integrity in its billing practices. The outcome of the investigation could have significant implications for the company and the broader healthcare industry.
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