“Humana Inc. (NYSE: HUM) is leading the large health insurance providers lower as the week gets off to a start. The news hit going into the weekend that the Centers for Medicare and Medicaid Services Ruling has been announced for preliminary 2014 Medicare Advantage benchmark payment rates. The long and short of the matter is that Humana sees a mid-single-digit decline in its benchmark monthly rate.
While shares are being hit hard this morning, investors should know that the Centers for Medicare and Medicaid Services has invited public comment on these preliminary rates before releasing final rates on April 1, 2013. This is the equivalent of an appeal period in a legal case, although that appeal period also can be commented on by noninsurance parties as well.
The SEC filing on Tuesday said:
If you enjoy the content at iBankCoin, please follow us on TwitterIn the Company’s earnings release call for the fourth quarter of 2012 held on February 4, 2013, management expressed confidence in the Company’s ability to grow both Medicare membership and earnings for 2014, based upon management’s stated expectation that the base Medicare Advantage payment rate would be flat to slightly down. The Company believes the preliminary base rates included in the CMS notice would result in a mid-single-digit decline in its benchmark payment rates (excluding the impact of the industry premium tax, county rebasing and risk factor recalibration – which are anticipated to be discussed in the final rate notice). Therefore, Humana is closely analyzing all operational avenues available to address those preliminary rates and the related impact upon the Company’s ability to grow both its Medicare membership and its earnings for 2014….”
