Medicare Rate Decision Seen By Hundreds of U.S. Employees

Photographer: Joshua Roberts/Bloomberg

U.S. Senator Charles Grassley, a Republican from Iowa, said that "market-sensitive information should be available to everyone at the same time, not handled loosely in a way that allows special access to some individuals." Close

U.S. Senator Charles Grassley, a Republican from Iowa, said that "market-sensitive... Read More

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Photographer: Joshua Roberts/Bloomberg

U.S. Senator Charles Grassley, a Republican from Iowa, said that "market-sensitive information should be available to everyone at the same time, not handled loosely in a way that allows special access to some individuals."

The Medicare rate decision that sent Humana Inc. (HUM)’s stock soaring in April was distributed to at least 436 government employees at the U.S. Health and Human Services Department before the agency’s official announcement.

Senator Charles Grassley’s staff obtained more than 1,000 pages of e-mails from HHS that mentioned the decision in the two weeks before April 1, according to Jill Gerber, a spokeswoman for the Iowa Republican. The e-mail count doesn’t include messages from the White House’s budget office, which would have reviewed the Medicare Advantage payment changes.

The Obama administration said April 1 it was scaling back a proposed cut in payments from Medicare Advantage, a health plan for the elderly and disabled that is managed for the government by Humana, UnitedHealth Group Inc. (UNH) and other insurers. The U.S. Securities and Exchange Commission and the Justice Department are investigating stock trades to determine whether government employees leaked word of the decision before the announcement.

“Market-sensitive information should be available to everyone at the same time, not handled loosely in a way that allows special access to some individuals,” Grassley said in a statement. “The information flow inside the government in this case should sound an alarm.”

Brian Cook, a spokesman for the Centers for Medicare and Medicaid Services, which administers Advantage programs, said the agency does regular employee training on privacy and ethics.

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“Our agency regularly handles sensitive information regarding payment rates, coverage decisions, and other technical policy decisions that need to be safeguarded until public release,’” Cook said in an e-mail. “While large numbers of employees may need to be involved in developing complex policies, we carefully vet which CMS employees have access to sensitive information and are part of specific clearance chains.”

About 40 minutes before the official announcement on April 1, an analyst with Height Analytics LLC in Washington issued a note to clients that correctly predicted the decision and caused shares of Humana and others to rise. The administrator of CMS, Marilyn Tavenner, later said that the decision to reduce the payment cut was made two weeks before it was released.

Grassley’s review of the e-mails found “no evidence CMS revealed anything prematurely” to people outside the government, Gerber said. Grassley has requested similar e-mail records from the budget office, Gerber said.

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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