WellPoint, others await Medicare rate report-WEB ONLY

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Wall Street will be watching when the federal government unveils final Medicare Advantage rates for 2010 after markets close today. So will health care insurers, including Indianapolis-based WellPoint Inc.

Two months ago, several insurance stocks sank sharply after the release of preliminary data showed rate increases to be smaller than analysts expected.

Medicare Advantage allows the elderly and disabled to receive benefits through plans offered by private health insurers. These plans receive a government subsidy and generally offer more benefits than traditional Medicare.

The Centers for Medicare and Medicaid Services said in February the national, average monthly payment rate per capita for Medicare Advantage plans would rise a half-percent for 2010. Actual rates for these plans vary by county, and they’re also adjusted depending on a patient’s health.

Wachovia analyst Matt Perry said in a Friday research report he expects reimbursement from these plans to decline “meaningfully” in 2010. The impact on an insurer’s overall earnings will depend on the size of the company’s Medicare Advantage business.

Louisville-based Humana Inc., for instance, has 1.4 million Medicare Advantage customers, or about 12 percent of its total enrollment.

Perry said in his report he expects Humana to be one of the insurers hardest hit by the rate. He expects WellPoint and Hartford, Conn.-based Aetna Inc. to see smaller earnings reductions.

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