Government Announces 2010 Medicare Advantage Rates

Analysts have said lower reimbursement could hurt earnings for private insurers, especially those like Louisville, Ky.-based Humana Inc. and Nashville, Tenn.-based HealthSpring Inc., which have large portions of Medicare Advantage business.

The Centers for Medicare & Medicaid Services said Monday the national average growth percentage per capita for Medicare Advantage plans will rise 0.8 percent in 2010.

This is a measure of the expected rate of growth for expenses in Medicare fee-for-service programs. It's also one of many factors used to figure Medicare Advantage payment rates, which also vary by county and patient health, among other factors.

The 2010 increase is higher than the half-percent gain CMS unveiled when it announced preliminary rates in February. But it's much lower than increases of 4.24 percent and 5.71 percent seen for rates this year and in 2008.

That's largely due to a proposed 21 percent cut in physician reimbursement for next year. That creates another worry among analysts covering managed-care companies, because many expect Congress to squash that cut.

If it does, insurers could be left with understated rates that won't bring in enough money to pay doctors at their old reimbursement level, Stifel Nicolaus Thomas Carroll said.