U.S. government proposes higher payments to Medicare insurers in 2021

NEW YORK (Reuters) - The U.S. government on Wednesday proposed an average 0.93% increase in its payments in 2021 to the health insurers that manage Medicare Advantage insurance plans for about 22 million people aged 65 or older or disabled.

The government will finalize the rate in April.

UnitedHealth Group Inc, Humana Inc, Anthem Inc, CVS Health Corp and Centene Corp are among the largest players in the Medicare Advantage market, in which private insurers are paid a set rate by the government to manage member healthcare.

The government payment rates affect how much insurers charge for monthly premiums, plan benefits and ultimately, how much they profit. Medicare Advantage covers about one-third of the people enrolled in the government’s Medicare program.

The Centers for Medicare and Medicaid Services, a division of the U.S. Department of Health and Human Resources, releases the proposed rate early each year and then opens a public comment period. The final rate adopted in April could be higher or lower than the proposed one.

Evercore ISI analyst Michael Newshel said in a research note ahead of the report that he was expecting about a 2.5 percent increase, in line with the 2.53 percent increase the government put in place for 2020 plans.

The government also proposed payment rates for advanced kidney disease.

Reporting by Caroline Humer and Carl O’Donnell; Editing by Bernadette Baum, Bill Berkrot and Dan Grebler