7/28/2019 Humana Responds to Rate Reversal

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1 of BN Humana Among I nsur er s Wi nni ng U. S. Medi car e Payment I ncr ease

Apr 1 2013 16: 32: 01

By Al ex WayneApr i l 1 (Bl oomber g) - - Uni t edHeal t h Gr oup I nc. , Humana I nc.

and other medi cal i nsurers won an i ncr ease rat her t han ar educt i on i n U. S. payment s f or Medi care Advant age pl ans st art i ng

next year. Humana j umped 8. 6 per cent .The Febr uary pr oposal f or a 2. 2 per cent cut i n a r ate t hat

determi nes t he payment s i s bei ng revi sed t o a 3. 3 percenti ncr ease, accor di ng t o a f i nal r ul e post ed t oday by t he Cent er sf or Medi care and Medi cai d Servi ces. The deci si on was made af t eri nsurers and more t han 130 l awmakers compl ai ned t hat t he Obamaadmi ni st r at i on rel i ed on f aul t y account i ng assumpt i ons.

I nsurer s had t hr eat ened t o reduce benef i t s i n Medi careAdvant age pl ans i f t he r ate cut was mai nt ai ned. About 13. 1mi l l i on el derl y and di sabl ed Ameri cans ar e enr ol l ed i n Advant agepl ans i nst ead of t he t r adi t i onal Medi car e pr ogr am, ent i ced byadded benef i t s such as l ower out - of - pocket spendi ng anddi scount s f or gym member shi ps and eyegl asses.

Humana, based i n Loui svi l l e, Kent ucky, gets 66 per cent ofi t s r evenue and 58 per cent of pr of i t f r om Medi car e Advant age,l eadi ng the i ndust r y, accor di ng to est i mat es by Cowen & Co.anal yst s. Mi nnet onka, Mi nnesot a- based Uni t edHeal t h, t he l argestU. S. i nsur er , and Heal t h Net I nc. , based i n Woodl and Hi l l s,Cal i f orni a, each get 25 per cent of r evenue f r om Advant age pl ans.

The St andard & Poor s 500 Managed Heal t h Care I ndex rose2. 8 percent . Humana shares l ed i nsurers and cl osed at $75. 02.Wel l Car e Heal t h Pl ans I nc. gai ned 3. 9 per cent , whi l eUni t edHeal t h i ncr eased 3. 1 per cent .

The gover nment est i mates t hat i t spent about $136 bi l l i onon t he pl ans i n 2012.

I ni t i al Cal cul at i on

Medi car e s i ni t i al cal cul at i on f or t he Advant age r at eassumed Congress woul d l et st and a 25 percent decr ease i ndoct ors pay, whi ch i s a component of t he over al l r ei mbursementt o t he i nsur ance compani es. That t r i mmi ng of r ates t o physi ci ansi s r equi r ed by a pr ovi si on i n a 15- year- ol d bal anced budget dealt hat has been over r i dden by Congress ever y year si nce 2002 i n amaneuver ni cknamed The Doc Fi x.

Mor e t han 130 l awmakers wr ot e t he Obama admi ni st r at i onaski ng f or t he Advant age cut t o be r econsi der ed, accordi ng t oAmeri ca s Heal t h I nsur ance Pl ans, t he i ndust r y s Washi ngt on-

based l obby gr oup.The Medi care agency sai d at t he begi nni ng of March that i t

onl y assumes cur r ent l aw i n al l pr oposed r ates. TheCongr essi onal Resear ch Ser vi ce sai d i n a report about t hr eeweeks l at er t hat Medi care had t he aut hor i t y to set Advantager at es based on t he assumpt i on t hat Congress woul d pass a DocFi x. For Rel at ed News and I nf ormat i on:Medi car e Pl ans Were Over pai d by Up to $5. 1 Bi l l i on, Audi t Fi nds

- Your def i ni t i ve sour ceI f you need hel p on t he BLOOMBERG press t he HELP key t wi ce

Copyr i ght ( c) 2013, Bl oomber g, L. P.

7/28/2019 Humana Responds to Rate Reversal

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2 of BN Humana Among I nsur er s Wi nni ng U. S. Medi car e Payment I ncr ease

Apr 1 2013 16: 32: 01NSN MJ 5W6J 07SXKX Cheaper Dr ug Cost s Pr oposed f or Seni ors on Medi care, U. S. SaysNSN MI AD486J I J UQ

Top heal t h st or i es: HTOP Top government st or i es: GTOP Most - r ead heal t h st or i es: MNI HEA

- - Edi t or s: Romai ne Bost i ck, Br uce Rul e

To cont act t he r eport er on t hi s st or y:Al ex Wayne i n Washi ngt on at +1- 202- 654- 4339 orawayne3@bl oomber g. net

To cont act t he edi t or r esponsi bl e f or t hi s st or y:Reg Gal e at +1- 212- 617- 2563 orr gal e5@bl oomber g. net[ TAGI NFO]

HUM US UNH US

- Your def i ni t i ve sour ceI f you need hel p on t he BLOOMBERG press t he HELP key t wi ce

Copyr i ght ( c) 2013, Bl oomber g, L. P.