Rate boost to Medicare Advantage plans powers insurers' stock surge

Health insurers led gains on Wall Street Tuesday after the Centers for Medicare & Medicaid Services reversed plans to make payment cuts to Medicare Advantage plans and instead offered a 3.3 percent increase.

The Wall Street Journal: Health Insurers Prevail In Medicare Fight With Washington
Washington wants to get tough on spending-;but in the latest round of payment rates for private Medicare plans, insurers emerged victorious. Shares of health insurance companies soared Tuesday after federal officials scrapped proposed payment cuts to carriers that run Medicare plans amid pressure from senior citizens and lawmakers (Kamp, 4/2).

Politico: CMS Reverses Course On Cuts
The insurance industry chalked up one of its greatest political victories in recent memory on Monday as the Obama administration reversed course on a proposal to cut Medicare Advantage rates. After intense lobbying, the agency said Monday that it would change the proposed 2.3 percent cut to those plans to a 3.3 percent boost. That's a significant swing worth billions of dollars to the industry next year alone (Norman and Haberkorn, 4/3).

Medpage Today: More $$$ Going To Medicare Advantage Plans
Payments to Medicare Advantage plans will increase by 3.3% in 2014, Medicare officials said late Monday. Officials at the Centers for Medicare and Medicaid Services (CMS) based the payment increase on the assumption that Congress will override scheduled cuts in physician reimbursements for an 11th consecutive year, the agency said. "The policies announced today further the agency's goal of improving payment accuracy in all our programs, while at the same time ensuring program stability and preserving beneficiary choice," Jonathan Blum, PhD, CMS' acting principal deputy administrator, said in a press release (Pittman, 4/2).

The Associated Press/Los Angeles Times: Health Insurers Lead Stocks Higher On Wall Street
U.S. stocks closed at a record highs Tuesday after reports on auto sales and factory orders provided the latest evidence that the U.S. economy is strengthening. Traders plowed money back into European stocks as the financial situation in Cyprus appeared to stabilize. Health insurers powered the gains a day after the government released revised reimbursement rates for Medicare Advantage plans. The new numbers suggest that funding cuts will be less severe than analysts and companies had feared (4/2).

Reuters: Health Insurers Rally After Surprise Medicaid Decision
Shares in some of the largest health insurers surged on Tuesday following an announcement late Monday by the government that it would increase payment rates for Medicare Advantage in 2014. The Centers for Medicare & Medicaid Services announced after the market closed on Monday that it would raise the reimbursement rate by 3.3 percent next year instead of cutting it by 2.3 percent, as it had proposed in February (4/2).

USA Today: Stock Indexes Close At New Highs On Medicare News
The Dow Jones industrial average and the Standard & Poor's 500 stock index closed at new highs Tuesday following strong reports on auto sales and factory orders, evidence that the U.S. economy is strengthening. The Dow closed up 89.16 points to 14,662.01 and the S&P 500 finished up 8.08 points to 1,570.25. The Nasdaq composite rose 15.69 points to 3,254.86 (Huggins, 4/3).

In other insurance industry news --

The Associated Press/Washington Post: Departing WellPoint CEO's Compensation Ballooned To $20.6M Last Year, As Insurer's Shares Fell
The compensation paid to outgoing Wellpoint Inc. CEO Angela Braly last year rose 56 percent, even as the company's shares slid on lower enrollment in its Blue Cross Blue Shield health plans. Braly, who resigned in August, received 2012 compensation valued at $20.6 million, according to an Associated Press analysis of the company's annual proxy statement. Most of the increase came from stock options (4/2).