UnitedHealthcare faces backlash and stock price 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 might 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 via dense coverage language and fielded frequent calls from collectors. She mentioned the expertise felt designed to exhaust sufferers into submission.

“It typically 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 People. And it embodies rising public furor towards insurers and specifically UnitedHealthcare, the most important non-public well being insurer within the U.S., which has grow to be the poster youngster for issues with the U.S. insurance coverage business and the nation’s sprawling health-care system. 

The corporate and different insurers have confronted backlash from sufferers who say they had been denied mandatory 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 information of those claims.” The corporate mentioned it’s “unlucky that CNBC rushed to publish this story with out permitting us and the supplier enough time to overview.” CNBC offered the corporate a number of days to overview Cowl’s scenario earlier than publication.

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

UnitedHealth Group is by far the most important firm within the insurance coverage business by market cap, price practically $275 billion. It controls an estimated 15% of the U.S. medical insurance market, serving greater than 29 million People, in response to a 2024 report from the American Medical Affiliation. In the meantime, rivals Elevance Well being and CVS Well being 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 yr following a string of setbacks for the corporate, regardless of a brief reprieve sparked partially by share purchases by firm 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 prison probe into potential Medicare fraud.

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

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

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

Extra lately, UnitedHealthcare turned an emblem for outrage towards insurers following the deadly taking pictures of its CEO, Brian Thompson, in December. Thompson’s dying reignited calls to reform what many advocates and lawmakers say is an opaque business that places income 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 steadiness affected person care with making a living. 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 instances, even imply the distinction between life and dying.

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 downside: a convoluted health-care system that prices the U.S. greater than $4 trillion yearly.

U.S. sufferers spend way more on well being care than folks anyplace else on the planet, but have the bottom life expectancy amongst giant, rich international locations, in response to the Commonwealth Fund, an impartial 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, authorities knowledge present. 

Whereas many developed international locations 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 Faculty of Legislation.

However the greatest 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 are being charged primarily by hospitals, but in addition drug corporations 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 elements comparable to overtreatment, fraud, health-care consolidation and administrative overhead increase prices for payers and suppliers, who then go these on via increased costs. U.S. prescription drug costs are additionally two to 3 instances increased than these in different developed international locations, partly as a result of restricted value regulation and pharmaceutical business practices comparable to patent extensions.

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

Nonetheless, UnitedHealthcare and different insurers have grow to be straightforward targets for affected person frustration — and never with out motive, in response to business consultants.

Their for-profit enterprise mannequin facilities on managing claims to restrict payouts, whereas complying with rules and maintaining 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 very important remedy or saddled with hefty payments, they added.

Insurers use instruments comparable to deductibles, co-pays, and prior authorization — or requiring approval earlier than sure remedies — to regulate prices. Business consultants say corporations are more and more counting on synthetic intelligence to overview claims, and that may typically result in inaccurate denials. 

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

Whereas different non-public U.S. insurers make use of lots of the similar techniques, UnitedHealth Group seems to have confronted essentially the most public backlash as a result of its measurement and visibility.

UnitedHealth Group’s market worth dwarfs the sub-$100 billion market caps of rivals comparable to 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 extra criticism of different 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 corporations and constructing them into its rising health-care enterprise. The corporate now serves practically 150 million folks and controls every part from insurance coverage and medical companies to delicate health-care knowledge. 

UnitedHealth Group owns a robust pharmacy profit supervisor, or PBM, referred to 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 medication 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 medication are supplied and at what value. UnitedHealth Group can maximize income by steering sufferers to lower-cost or higher-margin remedies and maintaining rebates, she mentioned. 

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

A STAT investigation final yr discovered that UnitedHealth makes use of its physicians to squeeze income from sufferers. However the firm in response mentioned its “suppliers and companions make impartial medical choices, and we anticipate them to diagnose and doc affected person info fully and precisely in compliance with [federal] tips.”

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

“I believe the corporate is actually finest at school in relation to insurers, by way of offering income for shareholders,” mentioned Roby. “However folks on the buyer facet in all probability say in any other case in relation to their expertise.” 

Nobody is aware of precisely how typically non-public insurers deny claims, since they don’t seem to be typically required to report that knowledge. However some analyses recommend that UnitedHealthcare has rejected care at increased charges than its friends for sure sorts of plans.

A January report by nonprofit group KFF discovered that UnitedHealthcare denied 33% of in-network claims throughout Inexpensive 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.

UnitedHealth didn’t reply to a request for touch upon that report. However 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 going through 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 needs to 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 beforehand advised information retailers that the lawsuit “has no advantage” and that the AI instrument is used to assist suppliers perceive what care a affected person may have. It doesn’t assist make protection choices, that are finally based mostly on the phrases of a member’s plan and standards from the Facilities for Medicare & Medicaid Providers, the spokesperson mentioned.

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

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

One employee, who requested anonymity for worry of retaliation, mentioned UnitedHealthcare’s supplier web site typically consists of medical doctors 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 knowledge regularly.” The overwhelming majority of all inaccuracies are as a result of errors or lack of up-to-date info submitted by suppliers, the corporate added.

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

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

She mentioned suppliers really feel compelled to submit pointless prior authorization requests out of worry that claims will not be paid on time. Baack mentioned that leads to an enormous backlog of paperwork on her finish and delays take care of 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 “frequently taking motion to simplify and modernize the prior authorization course of.” That features decreasing the variety of companies and procedures that require prior authorization and exempting certified supplier teams from needing to submit prior authorization requests for sure companies.

Whereas UnitedHealthcare shouldn’t be the one insurer going through criticism from sufferers, Thompson’s killing in December strengthened the corporate’s distinctive place within the public eye. 1000’s of individuals took to social media to specific outrage towards the corporate, sharing examples of their very own struggles.  

The general public’s hostile response to Thompson’s dying didn’t shock many business 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 numerous on-line well being communities “for years.”

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

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

Many sufferers aren’t conscious that they’ve a proper to enchantment, and those that do can spend hours combing via information to draft one, Graham mentioned. If sufferers are eligible to submit an enchantment letter via Claimable, she mentioned they will typically accomplish that in minutes. Every enchantment prices customers $39.95 plus transport, in response to the corporate’s web site.

“Lots of sufferers are afraid, lots of sufferers are pissed off, lots of sufferers are confused concerning the course of, so what we have tried to do is make all of it as straightforward as potential,” 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 concerning 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 prematurely of care, he mentioned.

“I run a expertise firm and I wish to win, and I need our prospects to win, and that is all very true, however on the similar 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 inclined to work together with insurers solely as soon as one thing goes mistaken, which contributes to their frustrations. Necessities comparable to prior authorization generally is a “large black field” for sufferers, however they’re additionally cumbersome for medical doctors, he mentioned. 

Friese mentioned his enterprise was impressed by his work as an interventional radiologist. In 2017, he co-founded a prior-authorization firm referred to as Verata Well being, which was acquired by the now-defunct health-care AI startup Olive. Friese purchased again his expertise and based his newest 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 techniques, and it introduced a $25 million funding spherical in June. 

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

UnitedHealth Group additionally set a grim document final yr that did little to assist public notion. The corporate’s subsidiary Change Healthcare suffered a cyberattack that affected round 190 million People, the most important reported health-care knowledge breach in U.S. historical past. 

Change Healthcare provides fee and income cycle administration instruments, in addition to different options, comparable to 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 referred to as Blackcat breached a part of Change Healthcare’s info expertise community. UnitedHealth Group remoted and disconnected the affected techniques “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 techniques had been offline, so a significant income supply for 1000’s of suppliers throughout the U.S. screeched to a halt. Some medical doctors pulled 1000’s of {dollars} out of their private financial savings to maintain their practices afloat.

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

Ransomware is a sort of malicious software program that blocks victims from accessing their laptop information, techniques and networks, in response to the Federal Bureau of Investigation. Ransomware teams comparable to Blackcat, which are sometimes based mostly in international locations comparable to Russia, China and North Korea, will deploy this software program, steal delicate knowledge 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 knowledge is effective and comparatively straightforward for cybercriminals to use, 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 kind of exercise till one thing modifications.”

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

In March 2024, UnitedHealth Group launched a brief funding help program to assist suppliers with short-term money stream.

This system received off to a rocky begin, a number of medical doctors 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 affirm that their money stream is normalized.”

Nearly a yr 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 1000’s 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 reimbursement and different choices, and proceed to succeed in out to these suppliers that haven’t been aware of earlier calls or electronic mail requests for extra info,” the spokesperson mentioned.

The stress for reimbursement 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 over the past yr, however three merchandise are nonetheless listed as “partial service accessible,” in response to UnitedHealth’s cyberattack response web site.

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, may 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 medication, easing a ache level for physicians and sufferers. 

However coverage modifications at UnitedHealth Group and different insurers might not drastically enhance take care of sufferers, medical insurance business consultants beforehand advised CNBC.

They mentioned there’ll must be structural modifications to all the insurance coverage business, which would require laws that might not be excessive on the precedence listing for the intently divided Congress. 

The highlight on UnitedHealth Group might solely develop brighter within the coming months. The trial date for Luigi Mangione, the person going through federal stalking and homicide costs in reference to Thompson’s taking pictures, is anticipated to be set in December. Mangione has pleaded not responsible to the fees.