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Investing.com -- Shares of major healthcare companies Humana (NYSE: NYSE:HUM), CVS Health (NYSE: NYSE:CVS), Elevance Health, and Cigna (NYSE:CI) fell sharply in Friday’s trading session, following a broader industry downturn precipitated by news of a Department of Justice (DOJ) investigation into UnitedHealth Group (NYSE:UNH)’s Medicare billing practices. Humana’s stock led the decline, dropping 5%, while CVS Health, Elevance Health, and Cigna each fell by 4% and 2% respectively.
The Wall Street Journal reported on Friday that the DOJ has initiated a civil fraud investigation into UnitedHealth Group, focusing on the insurer’s methods for recording diagnoses that lead to increased payments for its Medicare Advantage plans. The probe is also scrutinizing physician groups owned by UnitedHealth, as the Medicare Advantage system allows insurers to receive higher payments from the federal government for enrollees with certain diagnoses.
This development has raised concerns across the healthcare sector, with investors reacting to the potential implications for other companies involved in Medicare Advantage plans. The sell-off reflects fears that the investigation could extend beyond UnitedHealth, potentially impacting the broader industry’s billing practices and profitability.
While there is no direct accusation against Humana, CVS Health, Elevance Health, or Cigna at this time, the market’s response suggests a cautious approach from investors, who may be anticipating increased regulatory scrutiny on Medicare Advantage billing practices across the sector.
As the DOJ investigation unfolds, the healthcare industry will be closely monitored by investors for any signs of wider implications. The news has certainly cast a shadow over the sector, leading to a significant drop in stock prices for some of the major players as the market digests the potential risks associated with the DOJ’s findings.
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