UnitedHealth Group cooperating with federal investigation of its Medicare business

UnitedHealth Group says it’s cooperating with a U.S. Department of Justice investigation of its Medicare business, complying with formal criminal and civil probes.

The disclosure Thursday morning by the Eden Prairie-based health care giant is an about-face from the company’s response in May, when the Wall Street Journal first reported on the DOJ’s criminal investigation of the company — an article the company called at the time “deeply irresponsible.”

“UnitedHealth Group proactively reached out to the Department of Justice after reviewing media reports about investigations into certain aspects of the Company’s participation in the Medicare program,” UnitedHealth Group said Thursday in a regulatory filing. “The Company has now begun complying with formal criminal and civil requests from the Department.”

At the root are allegations that insurers, including the massive UnitedHealthcare insurance division at UnitedHealth, have gamed Medicare’s risk-rating system in order to wrongly inflate their federal payments.

It’s not the first time the company has faced such accusations. It is still fighting a whistleblower lawsuit filed in 2011 by an insider named Benjamin Poehling who made similar allegations.

UnitedHealth Group added that it has “full confidence in its practices and is committed to working cooperatively with the Department throughout this process.”

The journal’s article in May followed reports earlier this year that the company’s Medicare Advantage business was the subject of a civil probe, after it had been singled out in a federal watchdog report for the questionable use of Medicare diagnosis data to boost payments by billions of dollars.

Allegations that insurers, including the massive UnitedHealthcare insurance division at UnitedHealth, have gamed Medicare’s risk-rating system in order to wrongly inflate their federal payments are not new. The company is still fighting a whistleblower lawsuit first filed in 2011 by an insider named Benjamin Poehling who made similar allegations.

In the disclosure Thursday, the company referenced the Poehling case by saying “a court-appointed Special Master concluded there was no evidence to support claims of wrongdoing.”

Investigative reporting by the Wall Street Journal about the company’s risk adjustment practices, combined with public anger at the company following the killing of a top company executive on a public sidewalk in New York City, have built perceptions that UnitedHealth Group is a company under siege.

After the Journal’s report in May on the criminal investigation, UnitedHealth Group said in a statement: “We have not been notified by the Department of Justice of the supposed criminal investigation reported, without official attribution, in the Wall Street Journal today. The WSJ’s reporting is deeply irresponsible, as even it admits that the ‘exact nature of the potential criminal allegations is unclear.’"

The company was striking a different tone on Thursday.

“To provide our stakeholders transparency and confidence in the Company’s practices, the Company, as previously announced, has proactively launched its own initiative to conduct third party reviews of policies, practices, and associated processes and performance metrics for risk assessment coding, managed care practices, and pharmacy services,” UnitedHealth Group said. “The Company is committed to maintaining the integrity of its business practices and serving as reliable stewards of American tax dollars.”

This is a developing story. Check back for updates.

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