UnitedHealth Group Inc. ( UNH ) shares are on watch Tuesday after the Wall Street Journal reported that Senator Chuck Grassley launched an inquiry into the company's Medicare billing practices.

What To Know: Grassley, chairman of the Senate Judiciary Committee sent a letter to CEO Andrew Witty demanding details on how UnitedHealth ( UNH ) adds diagnoses to Medicare patients’ records. The letter cites Wall Street Journal reports that found UnitedHealth ( UNH ) received billions in payments for conditions doctors hadn't treated. Medicare Advantage insurers get paid more when patients are diagnosed with certain illnesses.

Grassley is asking for training manuals, audit results, compliance program details and software lists related to practices like in-home visits and chart reviews. The inquiry follows a Wall Street Journal report that the Justice Department is also investigating UnitedHealth's ( UNH ) billing.

UnitedHealth ( UNH ) denies wrongdoing and calls fraud allegations "outrageous and false." It says its Medicare Advantage plans lower costs and improve health outcomes.

Republicans in Congress are looking for ways to cut federal spending. Some lawmakers are targeting Medicare Advantage billing. Representative Greg Murphy, a North Carolina Republican and urologist, called UnitedHealth's ( UNH ) practices "immoral" and said some payment arrangements should be outlawed.

Dr. Mehmet Oz, Trump's nominee to lead the Medicare agency, supports Medicare Advantage but has privately raised concerns about overpayments. Investors had expected a more favorable regulatory environment under Republicans but scrutiny of Medicare Advantage is increasing. The Congressional Budget Office estimates that stopping payments for diagnoses found only in home visits would save $124 billion over ten years.

The House Ways and Means Committee is also investigating Medicare Advantage billing. Representative David Schweikert, an Arizona Republican, is leading a review of how the system pays insurers. He says the goal is to make insurers profit by improving patient health, not by adding diagnoses but admits changing the system will be politically difficult.

UNH Price Action: UnitedHealth Group ( UNH ) shares were roughly flat at $462.14 at time of writing, according to Benzinga pro.

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