Surprising Reversal: Medicare Advantage Payout Rates Headed Higher

by Nate Wooley | April 2, 2013 11:43 am

NewLetters[1]In an unexpected decision, the federal government has decided to raise the fees paid by Medicare Advantage.

The decision — which comes after an intense period of lobbying by the health care industry — reverses an earlier decision to cut the rates, reports CNN[2].

Initially, the Centers for Medicare & Medicaid Services proposed a 2.3% reduction in the fees it would pay to health care providers. In the fee schedule released Monday, however, the CMMS will provide an increase of 3.3% instead.

Medicare Advantage is a system in which seniors who qualify for Medicare elect to receive their benefits through private insurers. With the government paying less, providers would have either had to accept less in fees or pass that difference along to patients.

In its announcement of the new rate schedule[3], CMMS said the higher fees came about “after careful consideration of public comments.”

Several insurance stocks were spiking on the news, including Humana (NYSE:HUM[4]) and UnitedHealth Group (NYSE:UNH[5]). Both were up more than 6% as of this writing.

More stories about health care:

The opinions contained in this column are solely those of the writer.

Want to share your own views on money, politics and the 2012 elections? Drop us a line at and we might reprint your views in our InvestorPolitics blog! Please include your name, city and state of residence. All letters submitted to this address will be considered for publication.

  1. [Image]:
  2. reports CNN:
  3. announcement of the new rate schedule:
  4. HUM:
  5. UNH:
  6. CVS Prescription Refills Under Investigation:
  7. Popular Medicare Drug Plans to See Double-Digit Premium Hike:
  8. Competition Cuts Down on Medicare Fraud:

Source URL:
Short URL: