Humana, UnitedHealth Gain as Medicare May Raise Payments

Humana Inc. (HUM) and UnitedHealth Group Inc. (UNH) rose after congressional researchers said the U.S. Medicare program has the authority to raise payments to insurers.

A proposed 2.2 percent reduction in a rate that determines payment to private Medicare Advantage plans can be rescinded if officials assume Congress will block a 25 percent cut in physicians’ pay scheduled for next year. Medicare administrators have said they must take the annual cut into account when deciding Advantage plan rates, though Congress hasn’t followed through with the proposed doctor pay reductions for a decade.

The nonpartisan Congressional Research Service said in a memorandum yesterday that Kathleen Sebelius, the U.S. health secretary who oversees Medicare, has the authority to assume Congress won’t allow the cut in doctors’ pay. Doing so would improve the insurers’ payment rate by 4 or 5 percentage points, according to America’s Health Insurance Plans, a Washington- based lobbying group for the industry.

Humana gained 2.6 percent to $68.42 at 12:32 p.m. New York time, after earlier rising 4.7 percent for the biggest intraday gain for the Louisville, Kentucky-based company in more than seven weeks. UnitedHealth rose 1.6 percent to $56.51 after earlier advancing 2.5 percent for the Minnetonka, Minnesota- based company’s biggest gain in more than seven weeks.

Alex Kepnes, a Humana spokesman, and Tyler Mason, a UnitedHealth spokesman, didn’t immediately respond to messages asking about the memo.

To contact the reporter on this story: Alex Wayne in Washington at awayne3@bloomberg.net

To contact the editor responsible for this story: Reg Gale at rgale5@bloomberg.net

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