UnitedHealth Group revealed Thursday it is facing a Department of Justice investigation over its Medicare billing practices, adding to a string of setbacks for a company that owns the nation's largest and most powerful private insurer.
In a securities filing, the company said it has started complying with formal criminal and civil requests from the DOJ, and that it reached out to the department after reports of the probes surfaced. UnitedHealth also said it has launched a third-party review of its business policies and performance metrics.
The company told CNBC that it expects to complete that review towards the end of the third quarter.
In the filing, UnitedHealth said it "has full confidence in its practices and is committed to working cooperatively with the Department throughout this process."
UnitedHealth Group shares dropped around 2% on Thursday. The company's executives will likely face questions about the probe during its second-quarter earnings call on July 29.
Jared Holz, Mizuho Securities health care strategist, said in an email to clients on Thursday that the announcement is "not shocking," but noted that the company previously denied DOJ investigation claims. He said UnitedHealth's decision to admit to the probe and cooperate with the department "all sounds logical as it moves forward with a new CEO."
The company announced the abrupt departure of former CEO Andrew Witty in May.
UnitedHealth's announcement on Thursday comes after the Wall Street Journal reported in May that the Department of Justice is conducting a criminal investigation into the health-care giant over possible Medicare fraud. In response at the time, the company said it stands "by the integrity of our Medicare Advantage program."
In July, the Journal also reported that the DOJ interviewed several doctors about UnitedHealth's practices and whether they felt pressured to submit claims for certain conditions that bolstered payments from the Medicare Advantage program to the company.
That marked the second time this year that the insurer's Medicare Advantage business has come under federal scrutiny. The Journal also reported in February that the DOJ is conducting a civil investigation into whether the company inflated diagnoses to trigger extra payments to its Medicare Advantage plans.
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