UnitedHealth Group stock tumbled in premarket trading Friday following a report that said the Justice Department had launched a civil fraud investigation into the company’s Medicare billing practices.
The stock fell 8.8% to $458 in premarket trading.
The DOJ probe aims to examine the healthcare company’s practices for documenting diagnoses that trigger extra payments to its Medicare Advantage plans, The Wall Street Journal reported, citing people familiar with the matter.
Under the current system, the federal government pays insurers a fixed amount each month to oversee enrollees’ Medicare benefits. These payments can increase when patients have certain diagnoses.
An official Medicare booklet notes that each Medicare Advantage plan “can charge different out-of-pocket costs and have different rules for how you get services.”
Barron’s has reached out to the Justice Department and UnitedHealth for comment.
News of the investigation comes months after the DOJ moved to block UnitedHealth’s acquisition of home health provider Amedisys on antitrust grounds. Amedisys agreed to the $3.3 billion deal in 2023, but the Justice Department filed suit in November, arguing that the proposal would eliminate competition in the hospice industry.
In late December, Amedisys agreed to waive its right to terminate its merger agreement with UnitedHealth until the U.S. District Court for the District of Maryland rules on the lawsuit, or until the end of 2025, whichever comes first.