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: Markets Discount Another U.S. DowngradeAfter Friday's closing bell, Moody's followed Standard & Poor's and Fitch and cut its rating on U.S. government debt.
-
Eight Ways To Save on Your Next Luxury TripLooking for ways to stretch your retirement dollars? Follow these tips to get a deal on your next vacation.
-
Stock Market Today: Markets Discount Another U.S. Downgrade
After Friday's closing bell, Moody's followed Standard & Poor's and Fitch and cut its rating on U.S. government debt.
-
Donating Complex Assets Doesn't Have to Be ComplicatedIf you're looking to donate less-conventional assets but don't know where to start, this charity executive has answers, such as considering a donor-advised fund (DAF) for its tax benefits and ease of use.
-
What's Next for Stocks After a Chaotic SpringA chaotic tariff policy buffets investors looking for clarity on the economy and inflation.
-
Think a Repeal of the Estate Tax Wouldn't Affect You? WrongThe wording of any law that repeals or otherwise changes the federal estate tax could have an impact on all of us. Here's what you need to know, courtesy of an estate planning and tax attorney.
-
In Your 50s? We Need to Talk About Long-Term CareMany people don't like thinking about long-term care, but most people will need it. This financial professional recommends planning for these costs as early as possible to avoid stress later.
-
Where to Invest in an Uncertain MarketIn an uncertain market, you can still pocket juicy payouts ranging from 4% to 14%, depending on risk.
-
My First $1 Million: Events Industry CEO, 65, Northern New JerseyEver wonder how someone who's made a million dollars or more did it? Kiplinger's My First $1 Million series uncovers the answers.
-
Social Security Pop Quiz: Are You Among the 89% of Americans Who'd Fail?Shockingly few people have any clue what their Social Security benefits could be. This financial adviser notes it's essential to understand that info and when it might be best to access your benefits.
