Adds share price in paragraph 7, investor and analyst comment in paragraphs 8-12

By Sriparna Roy, Sneha S K and Amina Niasse

Feb 25 (Reuters) - U.S. Senator Chuck Grassley requested detailed information on UnitedHealth's UNH.N Medicare billing practices in a letter to CEO Andrew Witty, amid reports suggesting the insurer may have leveraged billing rules to its advantage.

Shares of the company fell before closing up 2% at $461.52 after the Wall Street Journal first reported news of the Grassley letter sent on Monday.

A spokesperson for UnitedHealthcare said in a statement the company would provide Senator Grassley with the facts, not "misinformation". It said its Medicare Advantage program, in which it manages plans for people aged 65 and older or who are disabled, is high performing and highly regulated and audited.

Over the last several months, the Journal has run a series of stories detailing how UnitedHealth profited from using Medicare billing rules to its favor. On Friday, it reported the U.S. Justice Department is investigating the company, while the health insurer said it was unaware of any new probe underway.

Grassley, a Republican from Iowa who heads the Senate Judiciary Committee, demanded the health insurer provide all records relating to the company's compliance program, training manuals and guidance documents to better understand its billing practices.

The letter cited findings from the Journal's articles and said "the apparent fraud, waste, and abuse at issue is simply unacceptable and harms not only Medicare beneficiaries, but also the American taxpayer."

Shares of rival Medicare Advantage insurer Humana HUM.N and CVS Health CVS.N ended up around 2% and 1%, respectively.

Kevin Gade, chief operating officer at Bahl & Gaynor, said now could be a good time for long-term investors to buy managed healthcare stocks.

He said that the Wall Street Journal reporting on the coding and billing issues that the investigations are believed to be based upon are backwards-looking and practices that the Medicare agency has already begun to tackle in auditing. Gade's firm owns about 2.6% of UnitedHealth shares.

The company is expected to provide details before March 10 on its steps to review all diagnoses submitted to the Centers for Medicare & Medicaid Services for Medicare Advantage enrollees, as well as identify whether they are obscure, irrelevant or inaccurate, according to the letter.

Nearly half of the 65 million people covered by Medicare are enrolled in Medicare Advantage plans run by private insurers.

Insurers are paid a set rate for each patient, but can be paid more for patients with multiple health conditions.

UnitedHealth, with various businesses including a large pharmacy benefit manager, faces margin pressure from rising medical costs in its insurance business.

(Reporting by Sneha S K and Sriparna Roy in Bengaluru and Amina Niasse in New York; Editing by Vijay Kishore, Caroline Humer and Bill Berkrot)

((Sneha.SK@thomsonreuters.com;))