Humana Shares Fall as 2014 Medicare Rates Cloud Outlook

Ty Wright | Bloomberg | Getty Images The Humana Inc. headquarters office stands in Louisville, Kentucky, U.S.

Health insurer Humana said on Tuesday that the government's proposed 2014 payment rates for Medicare Advantage participants were lower than expected and would affect its profit outlook, sending its shares lower.

Medicare Advantage is the Medicare program in which private insurers provide health insurance to seniors and are reimbursed by the government. Humana has around 2 million members enrolled in Medicare Advantage programs.

On Friday, the government's Centers for Medicare and Medicaid Services issued preliminary base payments rates for this business that implied a mid-single-digit decline in those rates for the company, Humana said.

"Humana is closely analyzing all operational avenues available to address those preliminary rates and the related impact upon the company's ability to grow both its Medicare membership and its earnings for 2014," Humana said in a regulatory filing.

Humana shares were down about 10 percent at $70.50 from a close on Friday of $77.99. Shares in UnitedHealth Group, another large provider of Medicare Advantage plans, were down about 6 percent at $54, from $57.32 on Friday.

UnitedHealth was not immediately available to comment.

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