UnitedHealthcare, the largest employer of doctors in the United States with over 90,000 physicians in 2023, is now under investigation by the U.S. Department of Justice. The civil fraud division, in collaboration with the Department of Health and Human Services' office of the inspector general, has initiated an inquiry into the company's Medicare billing practices. This development comes amid growing scrutiny over UnitedHealthcare's role in the Medicare Advantage program. The investigation has already impacted the company's market performance, with its stock declining by 10% in early morning trading following the news.
UnitedHealthcare, a subsidiary of UnitedHealth Group and one of the largest corporations globally with a market capitalization of $457 billion, plays a significant role in the healthcare landscape. An industry analyst estimates that approximately 5% of the U.S. gross domestic product flows through its infrastructure each day. The company is also a major player in the Medicare Advantage program, which allows private insurers to manage care for beneficiaries. This program covers about half of Medicare beneficiaries, but a Medpac study revealed that it costs taxpayers $83 billion more than traditional Medicare in 2024 alone.
The investigation centers on allegations that UnitedHealthcare has been manipulating patient diagnoses to unlawfully increase the monthly payments received through the Medicare Advantage program. Such practices, if proven true, could have substantial financial implications for U.S. taxpayers. The company has faced criticism for its business practices, with some analysts suggesting it prioritizes volume over patient health. UnitedHealthcare has responded to these claims, stating:
“The government regularly reviews all [Medicare Advantage] plans to ensure compliance and we consistently perform at the industry’s highest levels on those reviews.” – UnitedHealthgroup
Additionally, UnitedHealthcare has a technology arm, Change Healthcare, which is integral to its operations, facilitating as much as one-third of all payments from insurers to providers. This extensive network underscores the company's influence in the healthcare market, covering over 65 million Americans through Medicare.
Despite being embroiled in controversy, UnitedHealthcare has vigorously defended its business practices. In response to the ongoing investigation and criticism from media outlets like the Wall Street Journal, the company stated:
“We are not aware of the ‘launch’ of any ‘new’ activity as reported by the Journal. We are aware, however, that the Journal has engaged in a year-long campaign to defend a legacy system that rewards volume over keeping patients healthy and addressing their underlying conditions. Any suggestion that our practices are fraudulent is outrageous and false.” – UnitedHealthgroup
As the investigation unfolds, the healthcare giant faces mounting pressure to maintain its reputation and operational integrity. The situation raises broader questions about the structure and accountability of private insurers managing public programs like Medicare Advantage.