HUM - Why Shares of UnitedHealth Group CVS Health and Humana Fell Today
2024-04-02 19:59:52 ET
Shares of several leading health insurance managed care stocks plunged today after the federally run Centers for Medicare and Medicaid Services (CMS) finalized a lower-than-expected 3.7% payment rate increase for the 2025 calendar year. When all was said and done at close of Tuesday's trading, shares of Humana (NYSE: HUM) were down 13.4%, CVS Health (NYSE: CVS) had fallen 7.2%, and UnitedHealth Group (NYSE: UNH) plunged 6.4%.
In a press release late yesterday, the CMS -- the federal agency operating within the U.S. Department of Health and Human Services that administers the Medicare program -- announced that payments from the government to Medicare Advantage (MA) plans are expected to increase by 3.7% once they're risk-adjusted to account for the health of covered customers. That equates to a more than $16 billion year-over-year increase in payments to MA plans for 2025. The federal government is projected to pay between $500 billion and $600 billion in Medicare Advantage payments to private health plans next year.
CMS is also finalizing changes to the structure of the Medicare Part D drug benefit for calendar year 2025, capping annual out-of-pocket costs at $2,000 for prescription drugs for people with Medicare Part D next year.
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Why Shares of UnitedHealth Group, CVS Health, and Humana Fell Today