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(Reuters) - The U.S. government said on Monday it will increase the payment rate for health insurers that offer coverage through the Medicare Advantage program by 3.3 percent in 2014, boosting shares of Humana Inc by 8 percent after hours.
Medicare Advantage plans provide care for seniors who select to receive their Medicare benefits through private insurance plans. On February 15, the government proposed a Medicare Advantage payment reduction of 2.3 percent.
The program has ensured industry participation by paying more than the cost of the traditional Medicare program for the elderly and disabled. The proposed reduction had followed efforts by the Obama administration to reduce how much money it pays private insurers as an incentive to participate.
"The policies announced today further the agency's goal of improving payment accuracy in all our programs, while at the same time ensuring program stability and preserving beneficiary choice," Jonathan Blum, acting principal deputy administrator for the Centers for Medicare and Medicaid Services, said in a statement.
Shares of Humana, a major provider of Medicare Advantage plans, rose 8 percent in after-hours trading from a close Monday of $75.02.
Reporting by Susan Kelly in Chicago; Editing by Steve Orlofsky and Andrew Hay