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CMS softens Medicare Advantage funding changes

Published on NewsOK Modified: April 1, 2013 at 6:34 pm •  Published: April 1, 2013

But their finances won't be squeezed so tightly that they have to chop benefits, raise rates by large amounts or leave markets entirely, as some on Wall Street initially feared.

"I think what CMS did here was to buy stability for the program," said Dan Mendelson, president of the market analysis firm Avalere Health. "Most beneficiaries will not see dramatic changes going forward into next year."

The trade association America's Health Insurance Plans had launched an intense lobbying and marketing push after the initial CMS announcement. It included television ad campaigns entitled "Drastic" and "Too Much."

But the association said Monday that CMS with the final 2014 rate announcement took an important step "to help stabilize Medicare Advantage at a time when the program is facing significant challenges."

Some health insurance stocks had retreated since the CMS announcement in February. Shares of Humana Inc., for instance, had fallen more than 10 percent as of late last week. Medicare Advantage plans account for more than 60 percent of the Louisville, Ky., insurer's revenue.

Humana shares climbed more than 9 percent, or $6.78, after markets closed Monday to $81.80. Shares of the largest Medicare Advantage plan provider, Minneapolis-based UnitedHealth Group Inc., rose 4 percent, or $2.28, to $61.25 after hours.