UnitedHealth, Dow Jones' biggest constituent, is being probed for Medicare fraud, WSJ reports

UnitedHealth Group Inc. is under criminal investigation for possible Medicare fraud, the Wall Street Journal reported, citing unidentified people familiar with the matter.

The Justice Department has had a probe into the company’s Medicare Advantage business since at least last summer, according to the people.

The nature of the potential criminal allegations against the insurer isn’t clear, the newspaper said, citing the people. UnitedHealth’s shares fell more than 8% in postmarket trading in New York.
UnitedHealth didn’t respond to questions from the WSJ, while a spokesman for the Department of Justice declined to comment to the newspaper. UnitedHealth representatives also didn’t immediately respond to requests for comment from Bloomberg on Wednesday.

The report comes just after the insurer unexpectedly replaced its chief executive officer and suspended earnings guidance, a second surprise for investors after it cut its annual forecast. The move piled further doubt on the company’s strategy to focus on Medicare, which pushed profit growth for years but has recently faltered.

In addition to those headwinds, UnitedHealth also faces growing scrutiny in Washington, as antitrust regulators challenge its planned purchase of home health operator Amedisys Inc.

Insurers’ Medicare Advantage practices have drawn questions in recent years. Companies get paid more for taking care of sicker patients in the program, with rates determined by the diagnosis codes they submit. Watchdogs and whistleblowers have accused insurers of exaggerating how sick their patients are to boost profits, and some firms have paid large sums to resolve cases.

UnitedHealth faced allegations in a long-running civil Medicare fraud case that it improperly overcharged the US government by more than $2 billion. The company in March received a favorable finding in that case, bringing it a step closer to winning potential dismissal.