Analysts Downplay DOJ Investigation’s Impact on UnitedHealth
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Feb 28, 2025
Although UnitedHealth Group’s stock price declined by more than 7% following a Feb. 21 Wall Street Journal article about a Dept. of Justice investigation, equity analysts downplayed the impact on the company’s long-term financial performance. The reported civil fraud investigation centers on whether UnitedHealthcare, the company’s insurance subsidiary, improperly recorded diagnoses that led to higher payments. The DOJ is separately conducting an antitrust investigation into UnitedHealth, which began in October 2023.
Mizuho analysts in a Feb. 21 note wrote that “although the investigation is new, the issues brought into question are not.” They noted CMS in its 2024 Medicare Advantage rate notice “eliminated several codes overused by [the] industry” and that the industry is now in the second year of the three-year version 28 (v28) of the CMS Hierarchical Condition Categories risk adjustment model. The most recent data cited in the Journal article was from 2021 when the v24 risk model was in place, which differs significantly from v28.
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