UnitedHealth Group (UNH-9.40%) is under fire over its Medicare billing practices.
The Wall Street Journal reported Friday that the U.S. Department of Justice (DOJ) has launched a civil fraud investigation into how the company records diagnoses that lead to extra payments for its Medicare Advantage plans.
UnitedHealth stock fell almost 9% in Friday morning trading following the news.
The DOJ and UnitedHealth did not immediately respond to requests for comment.
In Medicare Advantage plans, the U.S. government pays private insurers a set amount of money to manage enrollees’ care. However, if a patient has certain diagnoses, the payments increase.
The Wall Street Journal (NWSA-0.69%) reported a series of articles last year on how Medicare paid UnitedHealth billions of dollars for questionable diagnoses. In December, the outlet analyzed Medicare records and found that patients seen by UnitedHealth-employed doctors saw a sharp rise in lucrative diagnoses after switching to the company’s Medicare Advantage plans.
Multiple doctors told the Journal that they were trained to document revenue-generating diagnoses. They also said that the company used software to suggest conditions and rewarded doctors with bonuses for considering them.
Justice Department attorneys have been following up on these findings, interviewing medical providers named in the Journal’s reports as recently as Jan. 31.
This new investigation is separate from the DOJ’s ongoing antitrust probe against the company. Additionally, the department blocked UnitedHealth’s $3.3 billion acquisition of Amedisys, a home health company last year.
UnitedHealth Group is the parent company of UnitedHealthcare, the nation’s largest health insurer, and the pharmacy benefit manager Optum, which has a vast network of medical practices.
The probe comes after a challenging year for the company. One of its subsidiaries, Change Healthcare, suffered a major cyberattack. Its health insurance arm also faced severe public backlash over its insurance claim denial practices following the murder of UnitedHealthcare CEO Brian Thompson.
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