Medicare Advantage Payment Cuts Cause Insurers' Stocks to Tumble - Becker's Hospital Review

Medicare Advantage Payment Cuts Cause Insurers’ Stocks to Tumble

Following a CMS announcement Friday that projected Medicare Advantage spending per person would drop more than 2 percent next year, publicly-traded insurers that offer the plans saw their stock prices tumble by more than 6 percent, or nearly $5 per share, according to a report by the Washington Post.

Humana and UnitedHealth Group, the two largest private insurers that manage Medicare Advantage plans, took hits of 6.4 percent and 1.2 percent, respectively, at Monday’s closing bell, according to the report.

Spending cuts coupled with additional slashes from the increasingly likely sequestration in the federal budget that would take place March 1 could force Medicare Advantage payments to insurers to fall by 5 percent in 2014. Further squeezing insurers’ profits is the premium tax intended to help pay for the government’s healthcare reform initiatives, according to the report.

Medicare Advantage plans enroll about 13 million beneficiaries or 27 percent of the total Medicare rolls, according to the report.

Medicare Advantage Payment Cuts Cause Insurers’ Stocks to Tumble

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