April 18 Health insurer Humana Inc said
on Thursday that it has begun an internal review of the events
around an announcement on April 1 of a government policy change
related to private Medicare.
News of the government's change in how it would reimburse
insurers leaked into the market that day ahead of the
announcement and Humana's shares rose sharply.
Humana spokesman Ton Noland confirmed that the company has
started the probe and fired the law firm of the lobbyist who was
working for Humana and who had been named by the Wall Street
Journal as having been involved in the leak.
Republican Senator Charles Grassley of Iowa said after the
Journal report that he had began looking into the circumstances
of the announcement and that he believed the policy decision may
have been leaked.
On April 1, the government was due to announce after the
stock market closed details of how much it would pay insurers
who provide private Medicare plans for the elderly, called
Medicare Advantage. But about 20 minutes before the market
closed, the investment research firm Height Securities sent out
an alert saying that the government had decided to go with a
more favorable payment plan, according to the Wall Street
The government then announced after the market closed that
it would raise the reimbursement rate instead of cutting it by
2.3 percent, as it had initially proposed in February.
Insurers are reimbursed for Medicare Advantage, private
insurance for seniors and the disabled by the government. This
type of insurance accounts for about two-thirds of Humana's
annual revenues. Insurers had lobbied loudly against the
proposed cut, saying it would cost the industry $11 billion.
The Journal reported that a lobbyist who worked for both law
firm Greenberg Traurig and Humana had been involved in the leak.
Greenberg Traurig and Height Securities were not immediately
available for comment.
The Centers for Medicare & Medicaid Services, which set the
policy, said on April 9 that it was investigating the events
around the decision. Shares of Humana, UnitedHealth Group Inc
and Aetna Inc all soared on the news.
Humana did not have advance knowledge of the CMS decision on
the rates, Noland said. News of the internal investigation was
first reported in the Wall Street Journal on Thursday.