The Justice Department has initiated an antitrust investigation into UnitedHealth, the largest health insurer in the United States, which also operates a significant drug benefits management system and a network of doctor groups.
According to sources familiar with the matter, investigators have been conducting interviews with representatives from various sectors of the healthcare industry where UnitedHealth competes, including doctor groups. During these interviews, investigators have been probing into certain relationships between UnitedHealth’s insurance unit, UnitedHealthcare, and its health-services arm, Optum, which owns physician groups and other assets.
Specifically, investigators are exploring the potential effects of UnitedHealth’s acquisitions of doctor groups on both competitors and consumers. However, spokespeople for UnitedHealth and the Justice Department have refrained from commenting on the investigation. UnitedHealth executives have previously stated that Optum and UnitedHealthcare operate impartially and collaborate with competitors on a regular basis.
This investigation occurs against the backdrop of increased scrutiny by the Biden administration’s antitrust regulators on some of the largest companies in the U.S., including Apple, Amazon.com, Live Nation Entertainment, and Alphabet’s Google unit. Jonathan Kanter, the Justice Department’s top antitrust official, has been advocating for stricter enforcement of antitrust laws to combat monopolistic practices. While the department has faced challenges in merger enforcement, its efforts to address monopolies persist.
The Biden administration has underscored the healthcare industry as a focal point in its antitrust endeavors.
UnitedHealth, a healthcare behemoth based in Minnetonka, Minn., has attracted antitrust scrutiny in the past. Despite successfully defending against a Justice Department challenge to an acquisition two years ago, the company finds itself under investigation once again.
With $372 billion in revenue last year, UnitedHealth’s insurance unit covers approximately 53 million individuals under various plans, including employer, Medicaid, and Medicare coverage. Over the years, through a series of acquisitions, Optum, a subsidiary of UnitedHealth, has amassed about 90,000 physicians, surgery centers, health data and technology units, and one of the largest pharmacy-benefit managers.
The Justice Department’s inquiry extends to UnitedHealth’s planned acquisition of home-health company Amedisys for around $3.3 billion. Additionally, the company is facing a private antitrust lawsuit from Emanate Health, a California hospital system, alleging coercion over affiliated physician groups.
The investigation into UnitedHealth focuses on Optum’s acquisitions of doctor groups and how the interplay between physician and health-plan units impacts competition. Investigators are examining whether UnitedHealthcare favored Optum-owned groups in contracting practices, potentially disadvantaging rival physicians.
Moreover, the Justice Department is probing Medicare billing practices, particularly concerning documentation of patients’ illnesses. Aggressive documentation practices can lead to increased payments to Medicare plans, which may benefit insurers like UnitedHealthcare.
Furthermore, investigators are evaluating how the partnership between UnitedHealthcare and Optum medical groups might affect compliance with federal rules governing the percentage of premiums allocated to administrative costs and profits versus patient care or customer rebates. When a company owns both the insurer and healthcare providers, there’s concern about exceeding the capped amount allocated to administrative costs and profits.
The Justice Department’s recent loss in a case targeting Optum’s acquisition of health-technology firm Change Healthcare underscores the complexities of such investigations. Despite allegations of anticompetitive practices, a federal judge ruled in favor of the acquisition, emphasizing Optum’s purportedly independent relationship with UnitedHealthcare.