How UnitedHealthcare become the face of America’s medical insurance frustrations

It took six months, numerous hours on hang and intervention from state regulators sooner than Sue Cover says she in spite of everything resolved an over $1,000 billing dispute with UnitedHealthcare in 2023.

Cover, 46, mentioned she was once overbilled for emergency room visits for her and her son, at the side of a normal ultrasound. While Cover mentioned her circle of relatives would ultimately had been in a position to pay the sum, she mentioned it might had been a monetary pressure on them. 

Cover, a San Diego advantages suggest, mentioned she had conversations with UnitedHealthcare that “felt like a circular dance.” Cover mentioned she picked thru dense coverage language and fielded widespread calls from collectors. She mentioned the revel in felt designed to exhaust sufferers into submission.

“It sometimes took my entire day of just sitting on the phone, being on hold with the hospital or the insurance company,” Cover mentioned. 

Cover’s revel in is acquainted to many Americans. And it embodies emerging public furor towards insurers and specifically UnitedHealthcare, the biggest personal fitness insurer within the U.S., which has turn out to be the poster kid for issues of the U.S. insurance coverage business and the country’s sprawling health-care device. 

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

UnitedHealthcare in a remark mentioned it’s running with Cover’s supplier to “understand the facts of these claims.” The corporate mentioned it’s “unfortunate that CNBC rushed to publish this story without allowing us and the provider adequate time to review.” CNBC supplied the corporate a number of days to study Cover’s scenario sooner than newsletter.

Andrew Witty, CEO of UnitedHealthcare’s corporate, UnitedHealth Group, stepped down previous this month for what the corporate known as “personal reasons.” Witty had led the corporate in the course of the thick of public and investor blowback. The insurer additionally pulled its 2025 income steerage this month, partially because of emerging scientific prices, it mentioned.

UnitedHealth Group is by means of a long way the most important corporate within the insurance coverage business by means of marketplace cap, value just about $275 billion. It controls an estimated 15% of the U.S. medical insurance marketplace, serving greater than 29 million Americans, in keeping with a 2024 record from the American Medical Association. Meanwhile, competition Elevance Health and CVS Health keep watch over an estimated 12% of the marketplace every. 

It’s no wonder that an organization with this type of broad succeed in faces public blowback. But the private and fiscal sensitivity of fitness care makes the venom directed at UnitedHealth distinctive, some mavens informed CNBC.

Shares of UnitedHealth Group are down about 40% this yr following a string of setbacks for the corporate, in spite of a short lived reprieve sparked partly by means of proportion purchases by means of corporate insiders. In the final month by myself, UnitedHealth Group has misplaced just about $300 billion of its $600 billion marketplace cap following Witty’s go out, the corporate’s tough first-quarter income and a reported felony probe into conceivable Medicare fraud.

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

Over the years, UnitedHealthcare and different insurers have additionally confronted a lot of affected person and shareholder proceedings and several other different executive investigations.

UnitedHealth Group could also be contending with the fallout from a February 2024 ransomware assault on Change Healthcare, a subsidiary that processes a good portion of the rustic’s scientific claims.

More lately, UnitedHealthcare become a logo 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 earnings above sufferers.

The issues pass deeper than UnitedHealth Group: Insurers are only one piece of what some mavens name a damaged U.S. health-care device, the place many stakeholders, together with drugmakers and pharmacy get advantages managers, are looking to steadiness affected person care with creating wealth. Still, mavens emphasised that insurers’ cost-cutting ways — from denying claims to charging greater premiums — can extend or block an important remedy, go away sufferers with surprising expenses, they are saying, or in some instances, even imply the adaptation between lifestyles and dying.

In a remark, UnitedHealthcare mentioned it’s “unfortunate that CNBC appears to be drawing broad conclusions based on a small number of anecdotes.”

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

U.S. sufferers spend way more on fitness care than other people any place else on the earth, but have the bottom lifestyles expectancy amongst massive, rich nations, in keeping with the Commonwealth Fund, an unbiased analysis crew. Over the previous 5 years, U.S. spending on insurance coverage premiums, out-of-pocket co-payments, prescription drugs and clinic services and products has additionally greater, executive information display. 

While many evolved nations have important keep watch over over prices as a result of they supply common protection, the U.S. is dependent upon a patchwork of private and non-private insurance coverage, continuously the usage of profit-driven middlemen to regulate care, mentioned Howard Lapin, adjunct professor on the University of Illinois Chicago School of Law.

But the most important driving force of U.S. fitness spending is not how a lot sufferers use care — it is costs, mentioned Richard Hirth, professor of fitness control and coverage on the University of Michigan.

There is “unbelievable inflation of the prices that are being charged primarily by hospitals, but also drug companies and other providers in the system,” mentioned Sabrina Corlette, co-director of the Center on Health Insurance Reforms at Georgetown University. 

Lapin mentioned components akin to overtreatment, fraud, health-care consolidation and administrative overhead carry prices for payers and suppliers, who then cross the ones on thru greater costs. U.S. prescription drug costs are additionally two to 3 instances greater than the ones in different evolved nations, partially because of restricted worth legislation and pharmaceutical business practices akin to patent extensions.

While sufferers continuously blame insurers, the corporations are most effective a part of the issue. Some mavens argue that getting rid of their earnings would not tremendously decrease U.S. health-care prices.

Still, UnitedHealthcare and different insurers have turn out to be simple goals for affected person frustration — and now not with out explanation why, in keeping with business mavens.

Their for-profit trade style facilities on managing claims to restrict payouts, whilst complying with rules and retaining consumers content material. That continuously method denying services and products deemed medically pointless, mavens mentioned. But every now and then, insurers reject care that sufferers want, leaving them with out essential remedy or saddled with hefty expenses, they added.

Insurers use equipment akin to deductibles, co-pays, and prior authorization — or requiring approval sooner than sure remedies — to keep watch over prices. Industry mavens say firms are increasingly more depending on artificial intelligence to study claims, and that may on occasion result in faulty denials. 

“It’s all part of the same business model — to avoid paying as many claims as possible in a timely fashion,” mentioned Dylan Roby, an associate on the UCLA Center for Health Policy Research.

UnitedHealth Group’s marketplace price dwarfs the sub-$100 billion marketplace caps of competition akin to CVS, Cigna and Elevance. UnitedHealth Group booked greater than $400 billion in income in 2024 by myself, up from more or less $100 billion in 2012.

It has expanded into many portions of the health-care device, sparking extra grievance of different segments of its trade — and the corporate’s skill to make use of one unit to learn every other.

UnitedHealth Group grew by means of purchasing smaller firms and construction them into its rising health-care trade. The corporate now serves just about 150 million other people and controls the entirety from insurance coverage and scientific services and products to delicate health-care information. 

UnitedHealth Group owns a formidable pharmacy get advantages supervisor, or PBM, known as Optum Rx, which provides it much more sway over the marketplace.

PBMs act as middlemen, negotiating drug rebates on behalf of insurers, managing lists of gear coated by means of fitness plans and reimbursing pharmacies for prescriptions. But lawmakers and drugmakers accuse them of overcharging plans, underpaying pharmacies and failing to cross financial savings directly to sufferers.

Owning a PBM provides UnitedHealth Group keep watch over over each provide and insist, Corlette mentioned. Its insurance coverage arm influences what care is roofed, whilst Optum Rx determines what medication are presented and at what worth. UnitedHealth Group can maximize earnings by means of guidance sufferers to lower-cost or higher-margin remedies and retaining rebates, she mentioned. 

The corporate’s succeed in is going even additional, Corlette added: Optum Health now employs or associates with about 90,000 docs — just about 10% of U.S. physicians — permitting UnitedHealth Group to direct sufferers to its personal suppliers and necessarily pay itself for care.

A STAT investigation final yr discovered that UnitedHealth makes use of its physicians to squeeze earnings from sufferers. But the corporate in reaction mentioned its “providers and partners make independent clinical decisions, and we expect them to diagnose and document patient information completely and accurately in compliance with [federal] guidelines.”

Other insurers, akin to CVS and Cigna, additionally personal massive PBMs and be offering care services and products. But UnitedHealth Group has accomplished larger scale and more potent monetary returns.

“I think the company is certainly best in class when it comes to insurers, in terms of providing profits for shareholders,” mentioned Roby. “But people on the consumer side probably say otherwise when it comes to their experience.” 

A January record by means of nonprofit crew KFF discovered that UnitedHealthcare denied 33% of in-network claims throughout Affordable Care Act plans in 20 states in 2023, one of the most easiest charges amongst main insurers. CVS denied 22% of claims throughout 11 states, and Cigna denied 21% in 8 states.

UnitedHealth didn’t reply to a request for touch upon that record. But in December, the corporate additionally driven again on public grievance round its denial charges, pronouncing it approves and can pay about 90% of claims upon submission. UnitedHealthcare’s website online says the rest 10% undergo an extra evaluation procedure. The corporate says its claims approval price stands at 98% after that evaluation.

In addition, UnitedHealth Group is going through proceedings over denials. In November, households of 2 deceased Medicare Advantage sufferers sued the corporate and its subsidiary, alleging it used an AI style with a “90% error rate” to disclaim their claims. UnitedHealth Group has argued it will have to be pushed aside from the case for the reason that households did not whole Medicare’s appeals procedure.

A spokesperson for the corporate’s subsidiary, NaviHealth, additionally in the past informed information retailers that the lawsuit “has no merit” and that the AI software is used to lend a hand suppliers perceive what care a affected person might want. It does now not assist in making protection choices, that are in the end in accordance with the phrases of a member’s plan and standards from the Centers for Medicare & Medicaid Services, the spokesperson mentioned.

Meanwhile, the reported Justice Department felony probe defined by means of the Wall Street Journal goals the corporate’s Medicare Advantage trade practices. In its remark, the corporate mentioned the Justice Department has now not notified it in regards to the reported probe, and known as the newspaper’s reporting “deeply irresponsible.”

Inside the corporate, staff say consumers and staff alike face hurdles. 

One employee, who asked anonymity for concern of retaliation, mentioned UnitedHealthcare’s supplier website online continuously contains docs indexed as in-network or accepting new sufferers when they are now not, resulting in widespread proceedings. Management continuously replies that it is too tricky to stay supplier statuses up-to-the-minute, the individual mentioned.

UnitedHealthcare informed CNBC it believes “maintaining accurate provider directories is a shared responsibility among health plans and providers,” and that it “proactively verifies provider data on a regular basis.” The overwhelming majority of all inaccuracies are because of mistakes or loss of up-to-date knowledge submitted by means of suppliers, the corporate added.

Emily Baack, a scientific administrative coordinator at UMR, a subsidiary of UnitedHealthcare, criticized the duration of time it might take a supplier to succeed in an actual beef up employee over the telephone who can lend a hand assess claims or prior authorization requests. She mentioned the corporate’s computerized telephone device can misroute other people’s calls or go away them looking forward to a beef up particular person for over an hour. 

But Baack emphasised that identical problems happen throughout all insurance coverage firms. 

She mentioned suppliers really feel pressured to post pointless prior authorization requests out of concern that says may not be paid on time. Baack mentioned that leads to an enormous backlog of forms on her finish and delays handle sufferers. 

UnitedHealthcare mentioned prior authorization is “an important checkpoint” that is helping be sure individuals are receiving protection for secure and efficient care.

The corporate famous it’s “continually taking action to simplify and modernize the prior authorization process.” That contains lowering the choice of services and products and procedures that require prior authorization and exempting certified supplier teams from wanting to post prior authorization requests for sure services and products.

Friese mentioned his trade was once impressed by means of his paintings as an interventional radiologist. In 2017, he co-founded a prior-authorization corporate known as Verata Health, which was once got by means of the now-defunct health-care AI startup Olive. Friese purchased again his generation and based his newest project, Humata, in 2023. 

Humata makes use of AI to automate prior authorization for all specialties and payers, Friese mentioned. The corporate basically works with medium and massive fitness techniques, and it introduced a $25 million investment spherical in June. 

“There’s just a lot of pent-up anger and angst, frankly, on all aspects of the health-care ecosystem,” Friese informed CNBC. 

In February 2024, a ransomware crew known as Blackcat breached a part of Change Healthcare’s knowledge generation community. UnitedHealth Group remoted and disconnected the affected techniques “immediately upon detection” of the danger, in keeping with a submitting with the U.S. Securities and Exchange Commission, however the resulting disruption rocked the health-care sector.

Money stopped flowing whilst the corporate’s techniques had been offline, so a big income supply for hundreds of suppliers around the U.S. screeched to a halt. Some docs pulled hundreds of greenbacks out in their private financial savings to stay their practices afloat.

“It was and remains the largest and most consequential cyberattack against health care in history,” John Riggi, the nationwide guide for cybersecurity and possibility on the American Hospital Association, informed CNBC.

Ransomware is a kind of malicious tool that blocks sufferers from gaining access to their pc information, techniques and networks, in keeping with the Federal Bureau of Investigation. Ransomware teams akin to Blackcat, that are continuously primarily based in nations akin to Russia, China and North Korea, will deploy this tool, thieve delicate information after which call for a fee for its go back. 

Ransomware assaults throughout the health-care sector have climbed in recent times, partly as a result of affected person information is effective and moderately simple for cybercriminals to take advantage of, mentioned Steve Cagle, CEO of the health-care cybersecurity and compliance company Clearwater. 

“It’s been a very lucrative and successful business for them,” Cagle informed CNBC. “Unfortunately, we’ll continue to see that type of activity until something changes.”

UnitedHealth Group paid the hackers a $22 million ransom to take a look at to give protection to sufferers’ information, then-CEO Witty mentioned all over a Senate listening to in May 2024. 

In March 2024, UnitedHealth Group introduced a brief investment help program to lend a hand suppliers with temporary money drift.

The program were given off to a rocky get started, a number of docs informed CNBC, and the preliminary deposits didn’t quilt their mounting bills.

UnitedHealth Group in the end paid out greater than $9 billion to suppliers in 2024, in keeping with the corporate’s fourth-quarter income record in January.

Witty mentioned in his congressional testimony that suppliers would most effective be required to pay off the loans when “they, not me, but they confirm that their cash flow is normalized.”

Almost a yr later, then again, the corporate is aggressively going after debtors, challenging they “immediately repay” their remarkable balances, in keeping with paperwork seen by means of CNBC and suppliers who gained investment. Some teams had been requested to pay off masses of hundreds of greenbacks in a question of days, in keeping with paperwork seen by means of CNBC.

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

″We proceed to paintings with suppliers on reimbursement and different choices, and proceed to succeed in out to these suppliers that experience now not been attentive to earlier calls or e-mail requests for more info,” the spokesperson said.

The pressure for repayment drew more ire toward UnitedHealth Group on social media, and some providers told CNBC that dealing with the company was a “very irritating revel in.”

The vast majority of Change Healthcare’s services have been restored over the last year, but three products are still listed as “partial provider to be had,” in keeping with UnitedHealth’s cyberattack reaction website online.