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Billing or Healing? UnitedHealth's HouseCalls Get a DOJ Checkup
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Key Takeaways
Prosecutors are examining whether UNH used home visits to secure higher federal Medicare payments.
The probe adds pressure as UNH battles rising costs and previously pulled its 2025 earnings guidance.
UNH denies wrongdoing and says its Medicare Advantage billing practices follow federal guidelines.
UnitedHealth Group Incorporated (UNH - Free Report) is currently facing scrutiny from the U.S. Department of Justice, which has launched a criminal investigation into its Medicare Advantage billing practices, per the Wall Street Journal. Federal prosecutors are interviewing former UNH doctors, nurses and staff to determine whether the company encouraged the use of inflated diagnoses, potentially to secure higher payments from Medicare.
Particular attention is being paid to the company's HouseCalls program, where nurses visited patients at home and allegedly recorded diagnoses in some cases that triggered additional payments. The news of the healthcare-fraud unit looking for upcoding is not new. This investigation is significant for several reasons. Medicare Advantage is a massive and fast-growing segment of U.S. healthcare, and any abuse of its billing structure undermines public trust and puts taxpayer dollars at risk.
Also, UnitedHealth is the largest player in the Medicare Advantage market. A criminal probe, distinct from earlier civil investigations, raises the stakes dramatically and could signal broader enforcement action across the industry. At stake are billions in federal payments, UnitedHealth’s reputation, and potentially its business model in care delivery and risk adjustment.
Regulatory penalties, lawsuits and tighter oversight could follow if wrongdoing is found, which may ripple across the entire Medicare Advantage ecosystem. In response, UnitedHealth has denied any wrongdoing. The company defends its practices as fully compliant with federal guidelines. UNH is facing these additional headwinds at a time when the industry is already under pressure from rising medical costs. It withdrew its 2025 earnings guidance back in May.
How are the Peers Handling Rising Medical Costs?
Not very well. Molina Healthcare, Inc. (MOH - Free Report) recently slashed 2025 earnings guidance and sounded the alarm over rising medical costs and unpredictable utilization trends. Looking at the full year, Molina now expects adjusted earnings per share to range between $21.50 and $22.50, a sharp reduction from its prior forecast of at least $24.50. For the second quarter of 2025, Molina now expects adjusted earnings of around $5.50 per share.
Another insurer, Centene Corporation (CNC - Free Report) , pulled its financial outlook in early July. Centene cited persistently higher medical costs and unforeseen enrollment shifts. CNC’s shares witnessed massive declines following the news, and peers like UnitedHealth and Molina followed suit.
UnitedHealth’s Price Performance, Valuation and Estimates
Shares of UNH have lost 40.2% in the year-to-date period compared with the industry’s decline of 31.1%.
Image Source: Zacks Investment Research
From a valuation standpoint, UnitedHealth trades at a forward price-to-earnings ratio of 12.82, up from the industry average of 11.64. UNH carries a Value Score of B.
Image Source: Zacks Investment Research
The Zacks Consensus Estimate for UnitedHealth’s 2025 earnings is pegged at $21.85 per share, implying a 21% drop from the year-ago period.
Image Source: Zacks Investment Research
The stock currently carries a Zacks Rank #5 (Strong Sell).
Image: Bigstock
Billing or Healing? UnitedHealth's HouseCalls Get a DOJ Checkup
Key Takeaways
UnitedHealth Group Incorporated (UNH - Free Report) is currently facing scrutiny from the U.S. Department of Justice, which has launched a criminal investigation into its Medicare Advantage billing practices, per the Wall Street Journal. Federal prosecutors are interviewing former UNH doctors, nurses and staff to determine whether the company encouraged the use of inflated diagnoses, potentially to secure higher payments from Medicare.
Particular attention is being paid to the company's HouseCalls program, where nurses visited patients at home and allegedly recorded diagnoses in some cases that triggered additional payments. The news of the healthcare-fraud unit looking for upcoding is not new. This investigation is significant for several reasons. Medicare Advantage is a massive and fast-growing segment of U.S. healthcare, and any abuse of its billing structure undermines public trust and puts taxpayer dollars at risk.
Also, UnitedHealth is the largest player in the Medicare Advantage market. A criminal probe, distinct from earlier civil investigations, raises the stakes dramatically and could signal broader enforcement action across the industry. At stake are billions in federal payments, UnitedHealth’s reputation, and potentially its business model in care delivery and risk adjustment.
Regulatory penalties, lawsuits and tighter oversight could follow if wrongdoing is found, which may ripple across the entire Medicare Advantage ecosystem. In response, UnitedHealth has denied any wrongdoing. The company defends its practices as fully compliant with federal guidelines. UNH is facing these additional headwinds at a time when the industry is already under pressure from rising medical costs. It withdrew its 2025 earnings guidance back in May.
How are the Peers Handling Rising Medical Costs?
Not very well. Molina Healthcare, Inc. (MOH - Free Report) recently slashed 2025 earnings guidance and sounded the alarm over rising medical costs and unpredictable utilization trends. Looking at the full year, Molina now expects adjusted earnings per share to range between $21.50 and $22.50, a sharp reduction from its prior forecast of at least $24.50. For the second quarter of 2025, Molina now expects adjusted earnings of around $5.50 per share.
Another insurer, Centene Corporation (CNC - Free Report) , pulled its financial outlook in early July. Centene cited persistently higher medical costs and unforeseen enrollment shifts. CNC’s shares witnessed massive declines following the news, and peers like UnitedHealth and Molina followed suit.
UnitedHealth’s Price Performance, Valuation and Estimates
Shares of UNH have lost 40.2% in the year-to-date period compared with the industry’s decline of 31.1%.
From a valuation standpoint, UnitedHealth trades at a forward price-to-earnings ratio of 12.82, up from the industry average of 11.64. UNH carries a Value Score of B.
The Zacks Consensus Estimate for UnitedHealth’s 2025 earnings is pegged at $21.85 per share, implying a 21% drop from the year-ago period.
The stock currently carries a Zacks Rank #5 (Strong Sell).
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.