Insurers Face Frozen Medicare Payments for 2011

UnitedHealth Group, Healthspring, Coventry Health Care and Humana are among the insurers that will receive the same payment rates for 2011 as they did this year for administering Medicare Advantage plans, according to a report in Bloomberg BusinessWeek.

The healthcare reform law calls for a freeze in Medicare Advantage payments and $130 billion in cuts to the program over the next 10 years, according to the report.

Many of the insurance companies had relied on the increases to account for portions of their earnings in the next year. UnitedHealth had accounted for the program to account for 14 percent, whereas Humana expected 42 percent. Analysts in the report said that the insurers will most likely counteract this with premium increases.

Other insurers, such as Healthspring and Coventry, reacted favorably to the freeze, as they planned for cuts in 2011. Some investors feared as much as a 4 percent wage cut, according to the report.

Read the BusinessWeek report on Medicare Advantage programs.