UnitedHealthcare is facing mounting challenges as it deals with a government investigation into its Medicare billing practices, pursues employee buyouts, and faces public criticism from billionaire investor Bill Ackman. These issues add to a tumultuous year for its parent company, UnitedHealth Group, which is the largest healthcare conglomerate in the U.S. by revenue, with a market cap exceeding $420 billion. UnitedHealthcare itself is the nation’s biggest private insurer. Over the past three months, shares of UnitedHealth Group have dropped by more than 20%, and the stock fell an additional 7% following the news of the investigation.
The Department of Justice has launched a civil fraud probe into UnitedHealth’s Medicare Advantage billing practices. The investigation focuses on whether diagnoses were manipulated to secure extra payments for the insurer’s plans, particularly those managed by physician groups owned by UnitedHealth. This comes after reports suggested Medicare overpaid the insurer for questionable diagnoses. UnitedHealth has denied the allegations, calling them false and asserting that the company meets the highest standards in government compliance reviews of Medicare Advantage plans.
In addition to the investigation, UnitedHealth has offered buyouts to its employees and warned that layoffs could follow if resignation quotas are not met. The company is looking to cut costs, particularly through digital technology initiatives. The company also faced public scrutiny from Ackman, CEO of Pershing Square Capital Management, who pledged to cover the legal fees of a Texas doctor involved in a dispute with UnitedHealth over patient care. Ackman later removed his post after UnitedHealth’s legal team refuted the doctor’s claims. The incident raised concerns about the insurer’s practices, with Ackman suggesting that the company overstated its profitability by denying necessary medical procedures.
The company is also still dealing with the fallout from the tragic killing of UnitedHealthcare’s CEO, Brian Thompson, in December. His death sparked public outrage over the healthcare industry’s denial of care and reignited calls for reform. Further complicating the situation, UnitedHealth’s subsidiary, Change Healthcare, was the victim of a cyberattack that compromised the health information of approximately 190 million people. The attack led to more than $3 billion in payouts to affected providers. UnitedHealth has confirmed that it became aware of the breach one year ago.
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