UnitedHealthcare faces backlash and inventory value decline

It took six months, numerous hours on maintain and intervention from state regulators earlier than Sue Cowl says she lastly resolved an over $1,000 billing dispute with UnitedHealthcare in 2023.

Cowl, 46, mentioned she was overbilled for emergency room visits for her and her son, together with a regular ultrasound. Whereas Cowl mentioned her household would finally have been capable of pay the sum, she mentioned it will have been a monetary pressure on them. 

Cowl, a San Diego advantages advocate, mentioned she had conversations with UnitedHealthcare that “felt like a round dance.” Cowl mentioned she picked by dense coverage language and fielded frequent calls from collectors. She mentioned the expertise felt designed to exhaust sufferers into submission.

“It generally took my complete day of simply sitting on the telephone, being on maintain with the hospital or the insurance coverage firm,” Cowl mentioned. 

Cowl’s expertise is acquainted to many Individuals. And it embodies rising public furor towards insurers and specifically UnitedHealthcare, the biggest personal well being insurer within the U.S., which has turn into the poster youngster for issues with the U.S. insurance coverage trade and the nation’s sprawling health-care system. 

The corporate and different insurers have confronted backlash from sufferers who say they have been denied needed care, suppliers who say they’re buried in pink tape and lawmakers who say they’re alarmed by its huge affect. 

UnitedHealthcare in a press release mentioned it’s working with Cowl’s supplier to “perceive the details of those claims.” The corporate mentioned it’s “unlucky that CNBC rushed to publish this story with out permitting us and the supplier satisfactory time to overview.” CNBC supplied the corporate a number of days to overview Cowl’s state of affairs earlier than publication.

Andrew Witty, CEO of UnitedHealthcare’s firm, UnitedHealth Group, stepped down earlier this month for what the corporate known as “private causes.” Witty had led the corporate by the thick of public and investor blowback. The insurer additionally pulled its 2025 earnings steerage this month, partly on account of rising medical prices, it mentioned.

UnitedHealth Group is by far the largest firm within the insurance coverage trade by market cap, value practically $275 billion. It controls an estimated 15% of the U.S. medical health insurance market, serving greater than 29 million Individuals, in response to a 2024 report from the American Medical Affiliation. In the meantime, rivals Elevance Health and CVS Health management an estimated 12% of the market every. 

It is no shock that an organization with such a large attain faces public blowback. However the private and monetary sensitivity of well being care makes the venom directed at UnitedHealth distinctive, some consultants advised CNBC.

Shares of UnitedHealth Group are down about 40% this 12 months following a string of setbacks for the corporate, regardless of a short lived reprieve sparked partially by share purchases by company insiders. Within the final month alone, UnitedHealth Group has misplaced practically $300 billion of its $600 billion market cap following Witty’s exit, the corporate’s tough first-quarter earnings and a reported criminal probe into possible Medicare fraud.

In a press release in regards to the investigation, UnitedHealth Group mentioned, “We stand by the integrity of our Medicare Benefit program.”

Through the years, UnitedHealthcare and other insurers have additionally confronted quite a few affected person and shareholder lawsuits and several other different authorities investigations.

UnitedHealth Group can also be contending with the fallout from a February 2024 ransomware attack on Change Healthcare, a subsidiary that processes a good portion of the nation’s medical claims.

Extra just lately, UnitedHealthcare grew to become a logo for outrage towards insurers following the deadly capturing of its CEO, Brian Thompson, in December. Thompson’s demise reignited calls to reform what many advocates and lawmakers say is an opaque trade that places earnings above sufferers.

The issues go deeper than UnitedHealth Group: Insurers are only one piece of what some consultants name a damaged U.S. health-care system, the place many stakeholders, together with drugmakers and pharmacy profit managers, are attempting to stability affected person care with getting cash. Nonetheless, consultants emphasised that insurers’ cost-cutting techniques — from denying claims to charging increased premiums — can delay or block essential remedy, depart sufferers with surprising payments, they are saying, or in some circumstances, even imply the distinction between life and demise.

In a press release, UnitedHealthcare mentioned it’s “unlucky that CNBC seems to be drawing broad conclusions based mostly on a small variety of anecdotes.”

Frustration with insurers is a symptom of a broader drawback: a convoluted health-care system that prices the U.S. more than $4 trillion yearly.

U.S. sufferers spend much more on well being care than individuals wherever else on the planet, but have the bottom life expectancy amongst giant, rich nations, in response to the Commonwealth Fund, an unbiased analysis group. Over the previous 5 years, U.S. spending on insurance coverage premiums, out-of-pocket co-payments, prescription drugs and hospital companies has additionally elevated, government data present. 

Whereas many developed nations have important management over prices as a result of they supply common protection, the U.S. depends on a patchwork of private and non-private insurance coverage, typically utilizing profit-driven middlemen to handle care, mentioned Howard Lapin, adjunct professor on the College of Illinois Chicago College of Legislation.

However the largest driver of U.S. well being spending is not how a lot sufferers use care — it is costs, mentioned Richard Hirth, professor of well being administration and coverage on the College of Michigan.

There may be “unbelievable inflation of the costs which might be being charged primarily by hospitals, but additionally drug firms and different suppliers within the system,” mentioned Sabrina Corlette, co-director of the Heart on Well being Insurance coverage Reforms at Georgetown College. 

Lapin mentioned components resembling overtreatment, fraud, health-care consolidation and administrative overhead increase prices for payers and suppliers, who then go these on by increased costs. U.S. prescription drug costs are also two to three times higher than those in different developed nations, partly on account of restricted value regulation and pharmaceutical trade practices resembling patent extensions.

Whereas sufferers typically blame insurers, the businesses are solely a part of the issue. Some experts argue that eliminating their earnings would not drastically decrease U.S. health-care prices.

Nonetheless, UnitedHealthcare and different insurers have turn into simple targets for affected person frustration — and never with out purpose, in response to trade consultants.

Their for-profit enterprise mannequin facilities on managing claims to restrict payouts, whereas complying with laws and holding prospects content material. That always means denying companies deemed medically pointless, consultants mentioned. However at instances, insurers reject care that sufferers want, leaving them with out important remedy or saddled with hefty payments, they added.

Insurers use instruments resembling deductibles, co-pays, and prior authorization — or requiring approval earlier than sure remedies — to manage prices. Trade consultants say firms are more and more counting on artificial intelligence to overview claims, and that may generally result in inaccurate denials. 

“It is all a part of the identical enterprise mannequin — to keep away from paying as many claims as doable in a well timed style,” mentioned Dylan Roby, an affiliate on the UCLA Heart for Well being Coverage Analysis.

Whereas different personal U.S. insurers make use of lots of the identical techniques, UnitedHealth Group seems to have confronted probably the most public backlash on account of its dimension and visibility.

UnitedHealth Group’s market worth dwarfs the sub-$100 billion market caps of rivals resembling CVS, Cigna and Elevance. UnitedHealth Group booked greater than $400 billion in income in 2024 alone, up from roughly $100 billion in 2012.

It has expanded into many elements of the health-care system, sparking more criticism of other segments of its enterprise — and the corporate’s capability to make use of one unit to learn one other.

UnitedHealth Group grew by shopping for smaller firms and constructing them into its rising health-care enterprise. The corporate now serves practically 150 million individuals and controls all the things from insurance coverage and medical companies to delicate health-care information. 

UnitedHealth Group owns a strong pharmacy profit supervisor, or PBM, known as Optum Rx, which supplies it much more sway over the market.

PBMs act as middlemen, negotiating drug rebates on behalf of insurers, managing lists of medicine coated by well being plans and reimbursing pharmacies for prescriptions. However lawmakers and drugmakers accuse them of overcharging plans, underpaying pharmacies and failing to go financial savings on to sufferers.

Proudly owning a PBM provides UnitedHealth Group management over each provide and demand, Corlette mentioned. Its insurance coverage arm influences what care is roofed, whereas Optum Rx determines what medicine are provided and at what value. UnitedHealth Group can maximize earnings by steering sufferers to lower-cost or higher-margin remedies and holding rebates, she mentioned. 

The corporate’s attain goes even additional, Corlette added: Optum Well being now employs or associates with about 90,000 docs — practically 10% of U.S. physicians — permitting UnitedHealth Group to direct sufferers to its personal suppliers and primarily pay itself for care.

A STAT investigation final 12 months discovered that UnitedHealth makes use of its physicians to squeeze earnings from sufferers. However the firm in response mentioned its “suppliers and companions make unbiased medical selections, and we count on them to diagnose and doc affected person data utterly and precisely in compliance with [federal] pointers.”

Different insurers, resembling CVS and Cigna, additionally personal giant PBMs and provide care companies. However UnitedHealth Group has achieved larger scale and stronger monetary returns.

“I feel the corporate is actually greatest at school with regards to insurers, by way of offering earnings for shareholders,” mentioned Roby. “However individuals on the patron aspect in all probability say in any other case with regards to their expertise.” 

Nobody is aware of precisely how typically personal insurers deny claims, since they are not usually required to report that information. However some analyses recommend that UnitedHealthcare has rejected care at increased charges than its friends for sure varieties of plans.

A January report by nonprofit group KFF discovered that UnitedHealthcare denied 33% of in-network claims throughout Reasonably priced Care Act plans in 20 states in 2023, one of many highest charges amongst main insurers. CVS denied 22% of claims throughout 11 states, and Cigna denied 21% in eight states.

In a press release, UnitedHealthcare mentioned that the proportion doesn’t mirror the corporate’s total claims denial price. It added that these plans signify lower than 2% of UnitedHealthcare’s complete claims. 

The corporate mentioned there’s a lack of “standardization within the trade relating to declare protocols,” which may end up in absolutely paid claims being reported as denials. UnitedHealthcare mentioned claims are permitted greater than 93% of the time after care is delivered. 

In December, the corporate additionally pushed again on public criticism round its denial charges, saying it approves and pays about 90% of claims upon submission. UnitedHealthcare’s web site says the remaining 10% undergo an extra overview course of. The corporate says its claims approval price stands at 98% after that overview.

As well as, UnitedHealth Group is dealing with lawsuits over denials. In November, households of two deceased Medicare Benefit sufferers sued the corporate and its subsidiary, alleging it used an AI mannequin with a “90% error price” to disclaim their claims. UnitedHealth Group has argued it should be dismissed from the case as a result of the households did not full Medicare’s appeals course of.

A spokesperson for the corporate’s subsidiary, NaviHealth, additionally previously told news outlets that the lawsuit “has no benefit” and that the AI device is used to assist suppliers perceive what care a affected person may have. It doesn’t assist make protection selections, that are finally based mostly on the phrases of a member’s plan and standards from the Facilities for Medicare & Medicaid Companies, the spokesperson mentioned.

In the meantime, the reported Justice Division prison probe outlined by the Wall Street Journal targets the corporate’s Medicare Benefit enterprise practices. In its assertion, the corporate mentioned the Justice Division has not notified it in regards to the reported probe, and known as the newspaper’s reporting “deeply irresponsible.”

Inside the corporate, workers say prospects and employees alike face hurdles. 

One employee, who requested anonymity for concern of retaliation, mentioned UnitedHealthcare’s provider website typically contains docs listed as in-network or accepting new sufferers after they’re not, resulting in frequent complaints. Administration typically replies that it is too tough to maintain supplier statuses updated, the individual mentioned.

UnitedHealthcare advised CNBC it believes “sustaining correct supplier directories is a shared duty amongst well being plans and suppliers,” and that it “proactively verifies supplier information frequently.” The overwhelming majority of all inaccuracies are on account of errors or lack of up-to-date data submitted by suppliers, the corporate added.

Emily Baack, a medical administrative coordinator at UMR, a subsidiary of UnitedHealthcare, criticized the size of time it may take a supplier to succeed in an actual help employee over the telephone who might help assess claims or prior authorization requests. She mentioned the corporate’s automated telephone system can misroute individuals’s calls or depart them ready for a help individual for over an hour. 

However Baack emphasised that comparable points happen throughout all insurance coverage firms. 

She mentioned suppliers really feel compelled to submit pointless prior authorization requests out of concern that claims will not be paid on time. Baack mentioned that leads to an enormous backlog of paperwork on her finish and delays look after sufferers. 

UnitedHealthcare mentioned prior authorization is “an necessary checkpoint” that helps guarantee members are receiving protection for secure and efficient care.

The corporate famous it’s “regularly taking motion to simplify and modernize the prior authorization course of.” That features reducing the number of services and procedures that require prior authorization and exempting certified supplier teams from needing to submit prior authorization requests for sure companies.

Whereas UnitedHealthcare just isn’t the one insurer dealing with criticism from sufferers, Thompson’s killing in December strengthened the corporate’s distinctive place within the public eye. Hundreds of individuals took to social media to precise outrage towards the corporate, sharing examples of their very own struggles.  

The general public’s hostile response to Thompson’s demise didn’t shock many trade insiders.

Alicia Graham, co-founder and chief working officer of the startup Claimable, mentioned Thompson’s homicide was “a horrible crime.” She additionally acknowledged that anger has been effervescent up in varied on-line well being communities “for years.”

Claimable is certainly one of a number of startups making an attempt to deal with ache factors inside insurance coverage. It isn’t a simple nook of the market to enter, and lots of of those firms, together with Claimable, have been utilizing the AI growth to their benefit.

Claimable, based in 2024, mentioned it helps sufferers problem denials by submitting custom-made, AI-generated attraction letters on their behalf. The corporate can submit appeals for situations resembling migraines and sure pediatric and autoimmune illnesses, although Graham mentioned it’s increasing these choices shortly.

Many sufferers aren’t conscious that they’ve a proper to attraction, and people who do can spend hours combing by data to draft one, Graham mentioned. If sufferers are eligible to submit an attraction letter by Claimable, she mentioned they’ll typically achieve this in minutes. Every attraction prices customers $39.95 plus transport, in response to the corporate’s web site.

“A variety of sufferers are afraid, quite a lot of sufferers are annoyed, quite a lot of sufferers are confused in regards to the course of, so what we have tried to do is make all of it as simple as doable,” Graham advised CNBC.

Some consultants have warned about the potential of health-care “bot wars,” the place all events are utilizing AI to attempt to acquire an edge.

Mike Desjadon, CEO of the startup Anomaly, mentioned he is involved in regards to the potential for an AI arms race within the sector, however he stays optimistic. Anomaly, based in 2020, makes use of AI to assist suppliers decide what insurers are and are not paying for upfront of care, he mentioned.

“I run a know-how firm and I need to win, and I would like our prospects to win, and that is all very true, however on the identical time, I am a citizen and a affected person and a husband and a father and a taxpayer, and I simply need well being care to be rational and be paid for appropriately,” Desjadon advised CNBC.

Dr. Jeremy Friese, founder and CEO of the startup Humata Well being, mentioned sufferers are likely to work together with insurers solely as soon as one thing goes mistaken, which contributes to their frustrations. Necessities resembling prior authorization generally is a “enormous black field” for sufferers, however they’re additionally cumbersome for docs, he mentioned. 

Friese mentioned his enterprise was impressed by his work as an interventional radiologist. In 2017, he co-founded a prior-authorization firm known as Verata Well being, which was acquired by the now-defunct health-care AI startup Olive. Friese bought back his know-how and based his floating ad enterprise, Humata, in 2023. 

Humata makes use of AI to automate prior authorization for all specialties and payers, Friese mentioned. The corporate primarily works with medium and enormous well being programs, and it introduced a $25 million funding spherical in June. 

“There’s simply quite a lot of pent-up anger and angst, frankly, on all points of the health-care ecosystem,” Friese advised CNBC. 

UnitedHealth Group additionally set a grim report final 12 months that did little to assist public notion. The corporate’s subsidiary Change Healthcare suffered a cyberattack that affected round 190 million Individuals, the biggest reported health-care information breach in U.S. historical past. 

Change Healthcare affords fee and income cycle administration instruments, in addition to different options, resembling digital prescription software program. In 2022, it merged with UnitedHealth Group’s Optum unit, which touches greater than 100 million sufferers within the U.S. 

In February 2024, a ransomware group known as Blackcat breached a part of Change Healthcare’s data know-how community. UnitedHealth Group remoted and disconnected the affected programs “instantly upon detection” of the risk, in response to a submitting with the U.S. Securities and Change Fee, however the ensuing disruption rocked the health-care sector.

Cash stopped flowing whereas the corporate’s programs have been offline, so a serious income supply for hundreds of suppliers throughout the U.S. screeched to a halt. Some docs pulled hundreds of {dollars} out of their personal savings to maintain their practices afloat.

“It was and stays the biggest and most consequential cyberattack in opposition to well being care in historical past,” John Riggi, the nationwide advisor for cybersecurity and threat on the American Hospital Affiliation, advised CNBC.

Ransomware is a sort of malicious software program that blocks victims from accessing their pc information, programs and networks, in response to the Federal Bureau of Investigation. Ransomware teams resembling Blackcat, which are sometimes based mostly in nations resembling Russia, China and North Korea, will deploy this software program, steal delicate information after which demand a fee for its return. 

Ransomware assaults inside the health-care sector have climbed lately, partially as a result of affected person information is efficacious and comparatively simple for cybercriminals to take advantage of, mentioned Steve Cagle, CEO of the health-care cybersecurity and compliance agency Clearwater. 

“It has been a really profitable and profitable enterprise for them,” Cagle advised CNBC. “Sadly, we’ll proceed to see that sort of exercise till one thing modifications.”

UnitedHealth Group paid the hackers a $22 million ransom to attempt to defend sufferers’ information, then-CEO Witty mentioned throughout a Senate listening to in Might 2024. 

In March 2024, UnitedHealth Group launched a temporary funding assistance program to assist suppliers with short-term money circulation.

This system bought off to a rocky begin, a number of docs advised CNBC, and the preliminary deposits didn’t cowl their mounting bills.

UnitedHealth Group finally paid out greater than $9 billion to suppliers in 2024, in response to the corporate’s fourth-quarter earnings report in January.

Witty mentioned in his congressional testimony that suppliers would solely be required to repay the loans when “they, not me, however they verify that their money circulation is normalized.”

Nearly a 12 months later, nonetheless, the corporate is aggressively going after debtors, demanding they “instantly repay” their excellent balances, in response to paperwork seen by CNBC and suppliers who obtained funding. Some teams have been requested to repay a whole bunch of hundreds of {dollars} in a matter of days, in response to paperwork seen by CNBC.

A spokesperson for Change Healthcare confirmed to CNBC in April that the corporate has began recouping the loans.

″We proceed to work with suppliers on compensation and different choices, and proceed to succeed in out to these suppliers that haven’t been aware of earlier calls or e mail requests for extra data,” the spokesperson mentioned.

The strain for compensation drew extra ire towards UnitedHealth Group on social media, and a few suppliers advised CNBC that coping with the corporate was a “very irritating expertise.”

The overwhelming majority of Change Healthcare’s companies have been restored during the last 12 months, however three merchandise are nonetheless listed as “partial service out there,” in response to UnitedHealth’s cyberattack response website.

Witty’s departure and the corporate’s warning about elevated medical prices, mixed with the fallout from Thompson’s homicide and the Change Healthcare cyberattack, might imply UnitedHealth faces an uphill battle. 

UnitedHealth Group seems to be making an attempt to regain the general public’s belief. For instance, Optum Rx in March introduced plans to remove prior authorizations on dozens of medicine, easing a ache level for physicians and sufferers. 

However coverage modifications at UnitedHealth Group and different insurers could not drastically enhance look after sufferers, medical health insurance trade consultants previously told CNBC.

They mentioned there’ll should be structural modifications to the complete insurance coverage trade, which would require laws that will not be excessive on the precedence checklist for the carefully divided Congress. 

The highlight on UnitedHealth Group could solely develop brighter within the coming months. The trial date for Luigi Mangione, the person dealing with federal stalking and homicide prices in reference to Thompson’s capturing, is anticipated to be set in December. Mangione has pleaded not responsible to the fees.