Possible Medicare Advantage Pay Reductions Cause Insurer Stocks To Slip

The proposed cuts in federal payments, which are open to comment until March 1, could lead to reduced coverage or fewer options for people who choose to buy these plans.   

The Associated Press/Washington Post: Health Insurer Stocks Slip Over Possible Medicare Advantage Payment Cuts
Health insurance stocks wobbled Tuesday after data released by the federal government pointed to possible steep Medicare Advantage payment cuts in 2014, which could lead to reduced coverage or fewer options for people buying the plans. The Centers for Medicare and Medicaid Services said Friday after markets closed that it expects costs per person for Medicare Advantage plans to fall more than 2 percent in 2014, a bigger drop than many analysts who cover the industry anticipated (2/19).

The Wall Street Journal: Health Insurers Tumble Amid Medicare Proposal
Shares in Humana Inc. and other major health insurers fell Tuesday after analysts said a government proposal for Medicare Advantage rates in 2014 is unfavorable for the companies. The late-Friday proposal is open to outside comments until March 1, ahead of a final announcement due April 1, so there is time for the industry to lobby for less pressure on rates. Insurers see Medicare Advantage—their version of the government health plan for seniors—as a key growth area, but expanding any presence there means taking on exposure to government payment decisions (Kamp, 2/19).

Reuters: Proposed 2014 Medicare Advantage Rates Cut Insurer Payments
Proposed reductions in government payments for Medicare Advantage insurance plans - estimated at $11 billion by an insurance industry trade group - sent health insurer shares lower on Tuesday. Humana Inc said that the planned cuts would affect its growth in 2014, and its shares fell as much as 10 percent. Insurers UnitedHealth Group Inc, Aetna Inc and Cigna Corp also were slightly down (Humer, 2/19).

Modern Healthcare: Insurers See Proposed Medicare Advantage Rates Hitting Revenue
Health insurance companies are expecting reduced Medicare Advantage payments to unfavorably impact revenue next year. The CMS on Friday released its proposed 2014 rates for Medicare Advantage plans, prompting negative reaction from payers and investors. Shares of health insurance plans such as Humana, Universal American Corp. and Health Net took a dive on the news when they opened for trading this morning. The CMS proposal calls for a 2.2% decline in Medicare Advantage benchmark payment rates. Humana, which derives most of its revenue from Medicare Advantage, saw one of the largest decreases in its share price (Kutscher, 2/19).

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