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UnitedHealth Group (UNH, Financial) shares fell sharply this morning after authorities opened an investigation into its Medicare Advantage billing practices. The U.S. Department of Justice launched a probe to examine whether UNH records diagnoses in ways that secure extra payments from government programs. Investors reacted immediately as pre-market trading showed a decline of more than 10%, with shares dropping over $52 to trade below $447.
Market participants are discussing the impact of the inquiry on the nation's largest Medicare Advantage provider. Regulators find that if they find any irregularities, all that could change the billing practices and affect not just UNH but the broader healthcare industry. The risks associated with aggressive billing methods were being looked at by traders and analysts, and others were cautiously hopeful that the company would deal with whatever problems as quickly as possible.
The case highlights the significance and need for compliance and transparency in the healthcare arena. The Justice Department has not yet given investors further details on the scope or lasting consequences of the statements. The discussions on trading platforms continue as the situation conveys the market's sensitivity to regulatory action and the fact that even industry leaders must follow strict standards.
This article first appeared on GuruFocus.