MW UnitedHealth takes another gut punch from government, as CMS boosts audit team

By Tomi Kilgore

CMS to audit Medicare Advantage plans back to 2018, as part of the Trump administration's efforts at 'crushing fraud, waste and abuse' of healthcare programs

UnitedHealth Group Inc. investors had another bitter pill to swallow, along with those of other Medicare Advantage plan providers, after the Trump administration's call to aggressively expand audits to uncover wrongful claims.

The Centers for Medicare and Medicaid Services announced late Wednesday a "significant expansion" of its auditing efforts, beginning immediately, which includes the hiring of nearly 2,000 employees. All eligible MA contracts for the payment years 2018 through 2024 will be audited beginning immediately.

"We are committed to crushing fraud, waste and abuse across all federal healthcare programs," said CMS Administrator Mehmet Oz. "While the Administration values the work that Medicare Advantage plans do, it is time CMS faithfully executes its duty to audit these plans and ensure they are billing the government accurately for the coverage they provide to Medicare patients."

That's just another gut punch for UnitedHealth investors, following reports of a government criminal probe, a withdrawn full-year financial outlook as its MA business has worsened and a bipartisan push to lower drug prices.

The stock $(UNH)$ had dropped as much as 3.5% earlier in the session, but has pared losses to fall 0.5% in recent morning trading. The stock has bounced 9.9% since it closed at a five-year low of $274.35 a week ago, but was still down 48.5% since it reported first-quarter results before the April 17 open.

Read: UnitedHealth's troubles pile up, as stock sinks again after report of DOJ probe.

Also read: UnitedHealth's stock may look cheap but it can still fall a lot further, HSBC warns.

Among other MA plan providers, shares of Humana Inc. $(HUM)$ sank 4.1% and CVS Health Corp.'s stock $(CVS)$ dropped 2.2% in morning trading.

MA plan providers receive government payments based on the diagnoses submitted for their members. The payments are "risk-adjusted," meaning the more serious or chronic the illness of a member, the higher the reimbursement.

The CMS has been auditing plans to confirm the diagnoses, but acknowledged that it was several years behind in completing the audits. It said the last time it had a significant recovery of MA overpayments was 2007, despite government estimates that it is overbilled by MA plan providers by about $17 billion a year, but could be as high as $43 billion a year.

As part of its "aggressive" strategy to accelerate the audits, the CMS said it was boosting the number of medical coders by 50 times, to 2,000 employees from 40 employees by Sept. 1.

That, and the deployment of new advanced technology, the CMS believes it can audit all of the approximately 550 eligible MA plans, up from the current rate of about 60 plans per year.

Basically, while Tesla Inc. $(TSLA)$ Chief Executive Elon Musk's Department of Government Efficiency, or DOGE, has been working to downsize the government and cut jobs, the Trump administration appears willing to grow areas that could help save the government money.

-Tomi Kilgore

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May 22, 2025 10:17 ET (14:17 GMT)

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