Dive Brief:
- Barely a day after the CMS announced it was going to pitch a 1% pay cut for Medicare Advantage, Humana and Aetna announced they expect their Medicare funding to drop in 2016, according to a Wall Street Journal report.
- Although CMS said the rate-reduction proposal would see the Medicare Advantage rate drop by a factor of 0.95% on the average for 2016, it predicted actual revenue for insurers would increase about 1.05% because of the growth rate in risk-coding scores would allow insurers to bill for more intense services.
- If the CMS proposal goes through, Humana said it anticipates its Medicare Advantage funding to fall by 1.25% to 1.75% in 2016, while Aetna expects its funding to fall by 1%.
Dive Insight:
As big insurers like Humana, Aetna and UnitedHealth Group are the biggest players in Medicare Advantage, expect them to weigh in during the comment period for the proposal before the final rates are announced in April. Though two of those companies announced that they expected their funding to drop because of the proposal, UnitedHealth announced it anticipated increased revenue as a result of the proposal, according to a report in TheStreet.com. Both Aetna and Humana stocks closed slightly down yesterday, 0.05% and 0.51% respectively—but Unitedhealth ended the day up 3.36% on the same news.