Bloomberg/AP, February 11, 2011

Initial 2012 reimbursement rates for Medicare Advantage plans should be roughly flat, which tops the consensus expectation of a 2% drop, according to Citi analyst Carl McDonald. McDonald said in a research note the rates will be hurt by cuts from the healthcare overhaul, but he also thinks they will benefit from an adjustment to prior estimates. He noted that the Centers for Medicare and Medicaid Services assumed physician reimbursement rates would drop 20% in 2010 and 2011, and that didn't happen. CMS will announce initial 2012 rates on Feb. 18 and then finalize the rates in April. If it does announce roughly flat rates, McDonald thinks most plans will see actual rates rise 2% next year when reimbursement is finalized.
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