UnitedHealth Group (UNH) stock fell out of the gate Friday, dragging the blue chip Dow Jones Industrial Average down with it. Weighing on the shares is a report in The Wall Street Journal that indicated the Justice Department is investigating the insurance company's Medicare billing practices.
The investigation is probing UnitedHealth's handling of diagnosis records that increase payments to its Medicare Advantage plans, including those from physician groups it owns, The Wall Street Journal article stated, citing people familiar with the matter.
The news comes after several Wall Street Journal investigations, including a December report that revealed UnitedHealth-employed doctors significantly increased lucrative diagnoses for patients after they joined the company's Medicare Advantage plans.
Sign up for Kiplinger’s Free E-Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
Doctors told The Wall Street Journal that they were trained by UnitedHealth to document revenue-generating conditions, some of which they found "obscure or irrelevant."
Furthermore, a July report from The Wall Street Journal found that UnitedHealth added diagnoses for untreated conditions, leading to $8.7 billion in extra federal payments in 2021. This included some diagnoses from in-home visits by nurses working for its HouseCalls business unit.
The Justice Department has not confirmed the investigation. In a statement, UnitedHealth said, "The Wall Street Journal continues to report misinformation on the Medicare Advantage (MA) program," and that "any suggestion that our practices are fraudulent is outrageous and false."
Is UnitedHealth stock a buy, sell or hold?
UnitedHealth has lagged the broader market over the past 12 months, down 2% on a total return basis (price change plus dividends) vs the S&P 500's 25% gain. Still, Wall Street is overwhelmingly bullish on Dow Jones stock.
According to S&P Global Market Intelligence, the average analyst target price for UNH stock is $637.24, representing implied upside of roughly 40% to current levels. Additionally, the consensus recommendation is a Strong Buy.
Financial services firm Morgan Stanley has an Overweight rating (equivalent to a Buy) and a $610 price target on the blue chip stock.
"United's model is enhanced via vertical integration with its OptumRx pharmacy benefit manager (PBM) platform, which is one of the three largest PBMs in the country," wrote Morgan Stanley analyst Erin Wright in a January 17 note. "With a large lead in breadth of services offerings and considerable exposure to government businesses, UnitedHealth is well positioned for any potential changes in the U.S. healthcare system."
Related Content
-
Stock Market Today: Stocks Seesaw After Big Market RallyThe latest consumer confidence data showed sentiment remains low.
-
IRA Rules at a Glance: Contribution Limits, Income Limits and Rollover OptionsHere are IRA contribution limits, income limits and rollover rules for Roth, traditional, SIMPLE and SEP IRAs at a glance.
-
Stock Market Today: Stocks Seesaw After Big Market RallyThe latest consumer confidence data showed sentiment remains low.
-
How to Delete Your 23andMe Data23andMe is pursuing a sale after filing for bankruptcy, leading many customers to look into deleting their data from the company.
-
What Is a Medallion Stamp? The Requirement for Transferring SecuritiesTransferring securities from one account to another often requires this extra step.
-
Would You Benefit From Investing in Cryptocurrency?Understanding the complexity of adding digital currency to your investments is critical, especially since drastic price changes can happen very quickly.
-
Why Company Stock May Be Riskier Than Employees RealizeStock compensation has its perks, but employees must be realistic (and unemotional) about their investments' prospects. Sometimes strategic sales are smart.
-
Can You Be Fired for Going to Work When You're Contagious?What's an employer to do when an employee shows up at the office with a cold or the flu and spreads germs to co-workers?
-
Stock Market Today: Markets Celebrate Trump's Tariff DétenteConsumer discretionary stocks led 10 of the 11 S&P 500 sector groups well into the green.
-
Social Security Fairness Act: Five Financial Planning Issues to RevisitMore money as a public-sector retiree is great, but there could be unintended consequences with taxes, Medicare and more if you're not careful.
