Updated at 10:13 AM EST

UnitedHealth Group shares fell sharply in early Friday trading following a report that the U.S. Department of Justice has launched a probe into the health insurance giant’s Medicare Advantage practices.

The Wall Street Journal said the investigation would center on UnitedHealth’s  (UNH)  diagnosis recordings that trigger extra Medicare Advantage (MA) payments but aren’t followed up with actual patient care.

Medicare Advantage is a program in which private insurers like UnitedHealth offer managed care for elderly Americans seeking coverage beyond the standard government Medicare offering, such as vision, dental and prescription drugs. The government pays insurers a fixed rate per enrolled beneficiary each month.

Payments under Medicare Advantage totaled $12.8 billion in 2023, a 30% increase from the previous year, but likely slipped in 2024 thanks to changes in the way insurers are compensated. 

“The Wall Street Journal continues to report misinformation on the Medicare Advantage program,” UnitedHealth said in a statement. “The government regularly reviews all MA plans to ensure compliance and we consistently perform at the industry’s highest levels on those reviews.’

“We are not aware of the “launch” of any “new” activity as reported by the Journal,” the statement added. “We are aware, however, that the Journal has engaged in a year-long campaign to defend a legacy system that rewards volume over keeping patients healthy and addressing their underlying conditions. Any suggestion that our practices are fraudulent is outrageous and false.”

Last year, a report from the Office of Inspector General for the Department of Health and Human Services said UnitedHealth, as well as other Medicare Advantage insurers, collected $7.5 billion in dubious payments in 2022 tied to health risk assessments. UnitedHealth took in $3.7 billion.

“The lack of any other follow-up visits, procedures, tests, or supplies for these diagnoses in [Medicare Advantage] encounter data for 1.7 million enrollees raises concerns that either: (1) the diagnoses are inaccurate and thus the payments are improper or (2) enrollees did not receive needed care for serious conditions reported only on [health-risk assessments] or HRA-linked chart reviews,” the report stated.

UnitedHealth facing multiple probes

Reports of the DoJ probe come shortly after Brian Thompson, chief executive of the United Healthcare insurance division, was shot and killed outside a hotel in Manhattan last year while heading to a group investor conference.

Luigi Mangione, a 26-year old from Maryland, was arrested shortly after. The DoJ in December charged him with “methodically planning when, where, and how to carry out his crime.”

The killing unleased a torrent of attacks from Americans who were upset about the role that health-insurance groups and pharmacy-benefit managers play in the U.S. health-care system.

The U.S. Federal Trade Commission added to that pressure earlier this week when it accused the three largest pharmacy-benefit managers of inflating the cost of medicines, sometimes prescribed for serious illnesses such as heart disease, cancer and HIV, and reaping more than $7.3 billion in extra profit.

Related: UnitedHealth reports billions in revenue and profit amid controversy

United Healthcare Group CEO Andrew Witty, for his part, addressed the ongoing debate over the role of pharmacy-benefit managers in the U.S. health-care system.

“There are participants in this business that benefit from high prices,” he told investors on a conference call. “American consumers pay disproportionally more [for some drugs, such as GLP-1s] than people from other countries. PBMs play a vital role in holding those prices down.”

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Earlier this year, the group posted fourth-quarter revenue of more than $100.8 billion, the most on record, with revenue from its Optum health-insurance division rising to $65.1 billion. 

UnitedHealth shares were last marked9.3% lower in early Friday trading and changing hands at $455.50 each, a move that extends the stock’s six-month slump to around 21%. 

Health insurance rivals Cigna Group  (CI)  and Humana  (HUM)  were marked 0.5% and 4.8% lower respectively, while CVS Health  (CVS)  fell 1.75%.

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