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Medicare Advantage Payment Rates for 2015 Cloaked in Uncertainty

Christopher Cheney, for HealthLeaders Media, February 26, 2014

While the financial markets abhor uncertainty, Wall Street reacted positively to a security exchange filing Monday by Humana that predicted the company would experience a weaker-than expected 2015 Medicare funding decline. Humana reported the financial hit could be harder depending on the impact of proposed changes to enrollee risk assessments.

Humana stock ended trading Monday up 10 percent.

In a research note released Tuesday, Wells Fargo sounded a cautiously bullish tone for investors in Medicare Advantage insurers such as Humana.

"We now expect the overall headwinds to [Medicare Advantage] health plans for 2015 to be 3.79 percent (better than our previous estimate of 5.67 percent), with some variation by plan and county," Wells Fargo reported.

"This is consistent with an 8-K released by Humana on February 24, in which the company updates its anticipated funding decline in MA in 2015 to 3.5-4.0 percent (from 6.0-7.0 percent). We expect significant pressure from the industry for further improvements in the final rate notice expected on April 7, but believe further help is less likely."

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