After months of unconfirmed reports about a potential federal probe into its Medicare business, UnitedHealth Group, the giant health care conglomerate, announced Thursday morning that it was cooperating with the U.S. Department of Justice and responding to both formal criminal and civil requests.
UnitedHealth said it had “proactively reached out” to the Justice Department after news reports of a government investigation had surfaced, according to an unsigned company statement.
The Justice Department did not immediately respond to a request for comment.
The probe appears to focus on the private insurance plans that UnitedHealth offers as an alternative to traditional Medicare. The company is the largest supplier of these Medicare Advantage plans, which are sold to millions of older Americans and to people with disabilities. The business has become a critical source of revenues to UnitedHealth as Americans have increasingly chosen to enroll in these plans instead of the government’s program.
But UnitedHealth, along with other major insurers, has come under sharp scrutiny from federal officials. Government investigators have claimed that the company has overbilled Medicare, and regulators have been looking into whether it also inappropriately boosted payments by diagnosing enrolled patients with additional conditions, logging them as sicker than they are. Medicare pays UnitedHealth more when patients are sicker.
UnitedHealth owns UnitedHealthcare, the insurer that sells the Medicare Advantage plans, and also operates a vast network of doctors through its Optum unit. Many of these doctors treat patients who are enrolled in the company’s plans.
The Wall Street Journal has been investigating whether UnitedHealthcare was increasing Medicare payments by inappropriately coding patients with diagnoses. It recently reported that prosecutors had been interviewing former employees.
Medicare officials have already cracked down on some potentially abusive practices. But the probe by the Department of Justice signals a broader interest by regulators into this historically lucrative business, which contributes significantly to the company’s $400 billion in annual revenues.
The Justice Department inquiry comes at a difficult time for UnitedHealth, which has been reeling from a series of challenges, including the brutal murder in December of its top insurance executive, Brian Thompson. In May, the company abruptly replaced its chief executive with its former chief executive, Stephen Hemsley, after the company reported disappointing results. Its stock has plummeted, and on Thursday the share price was down in early trading.
In its statement, the company expressed “full confidence in its practices,” and that it was “committed to working cooperatively with the Department through the process.” It added that the company had “a long record of responsible conduct and effective compliance” and that it was conducting an independent review of its practices.
UnitedHealth “is committed to maintaining the integrity of its business practices and serving as reliable stewards of American tax dollars,” the company said.
Reed Abelson covers the business of health care, focusing on how financial incentives are affecting the delivery of care, from the costs to consumers to the profits to providers.
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