UnitedHealth Group, one of the largest healthcare companies in the US, is facing increased scrutiny over its Medicare billing practices, Bloomberg reports.
A recent report by The Wall Street Journal revealed that the Justice Department has been investigating whether the company improperly boosted payments from the federal government by overstating the severity of patients’ health conditions. The news sent UnitedHealth’s stock tumbling, highlighting the financial and regulatory risks surrounding the Medicare Advantage program.
Medicare Advantage, a private alternative to traditional Medicare, now covers half of all Medicare beneficiaries, or about 33 million people. Under this system, the government pays private insurers a fixed monthly amount per enrollee, with higher payments allocated for sicker patients who require more medical care.
For years, whistleblowers, government audits, and federal investigations have raised concerns that some private insurers, including UnitedHealth, may have exaggerated patients’ health conditions to increase their reimbursements. These allegations have led to legal battles and settlements, with some cases resulting in civil fraud charges.
The Medicare Payment Advisory Commission, a congressional advisory panel, has repeatedly called for reforms, arguing that Medicare Advantage plans receive billions more in payments than if the same individuals were covered under traditional Medicare. In 2024 alone, the advisory group estimated an $83 billion overpayment, contributing to a cumulative difference of over half a trillion dollars since 2007.
UnitedHealth has strongly denied any wrongdoing, stating that it is unaware of any new investigations and calling allegations of fraud “outrageous and false.” The company has expressed its willingness to cooperate with lawmakers and regulators to address any concerns.
The broader Medicare Advantage industry also disputes claims of overbilling. The Better Medicare Alliance, an industry group, argues that private plans save the government money while providing greater value to beneficiaries. The group maintains that all Medicare Advantage plans undergo audits to ensure accurate payments.
The investigation has drawn attention from lawmakers, including Senator Chuck Grassley (R-Iowa), who has been vocal about potential Medicare Advantage fraud. In a recent letter, he accused private insurers of “defrauding the American taxpayer” and urged further scrutiny of the program.
Whistleblowers have played a key role in bringing these concerns to light. Teresa Ross, a former employee of a Washington state health plan, alleged systematic fraud in a case that took over a decade to resolve. The Justice Department ultimately pursued her claims, resulting in settlements totaling up to $100 million.
With Medicare Advantage now accounting for a significant portion of federal healthcare spending—estimated at $462 billion in 2024—calls for increased oversight and potential policy changes are likely to grow. Whether the Justice Department’s reported investigation leads to formal charges or regulatory reforms remains to be seen, but the case has already sparked renewed debate over the financial sustainability and fairness of the Medicare Advantage system.
