Humana (HUM) led after-hours declines in healthcare stocks Monday evening, dropping nearly 10% after the Centers for Medicare & Medicaid Services (CM💎S) announced that federal payments to 澳洲幸运5官方开奖结果体彩网:Medicare Advantage plans will match the initial proposal outlined in January, effectively crimping health insurers’ profit margins amid rising medical costs.

The CMS said Medicare Advantage plans will receive an average payment increase of 3.7%, or over $16 billion, from 2024 to 2025—the same percentage increase proposed in January. The agency said the federal government projects to contribute between $500 billion and $600 billion in Medicare Advantage payments to 澳洲幸运5官方开奖结果体彩网:private health plans in 2025. The CMS aims “to maintain the stability of the Medicare Advantage” program and keep payments “up-to-date and accurate,” said agency administrator Chiquita Brooks-LaSure.

The payment revision, after excluding the estimated growth in patient risk scores, represents a 0.16% decline, disappointing investors and leading 澳洲幸运5官方开奖结果体彩网:health insurers who had lobbied for a higher increase. Research from JPMorgan cited by Bloomberg revealed that there has only been one instance in the past decade where Medical Advantage plan final rates have not increased from the government’s initial rate proposals.

CVS Health (CVS), UnitedHealth Group (UNH), and Centene (CNC) also tumbled following the news late Monday, losing 5.9%, 4.5%, and 2.3%, respectively, ﷺin after-hours trading.

But shares of Humana, which had 澳洲幸运5官方开奖结果体彩网:warned in January that🥂 higher-than-expected medical costs to cover Medicare Advantage patients would hurt its full-year profit, were hit hardest. The stock fell 9.6% to $317.70 in Monday's extended trading, pu☂tting it at levels not seen since the early days of the pandemic in March 2020.

Last month, Humana’s 澳洲幸运5官方开奖结果体彩网:chief financial officer, Susan Diamond, told investors at a conference that the health insurer would fall short of reaching its upper-end earnings target of $6 to $10 per share in 2025 without a more significant increase in payments.

The Humana share price gapped below a broad 澳洲幸运5官方开奖结果体彩网:descending triangle in mid-January following an ominous 澳洲幸运5官方开奖结果体彩网:death cross pattern appearing on the chart, with declines accelerating through February and early▨ March. More recently, the price has traded mostly sideways on decl𝔉ining share turnover as investors reassess the stock’s next move. 

Amid Tuesday’s expected news-driven sell-off to a multi-year low, investors should keep an eye on a key 澳洲幸运5官方开奖结果体彩网:horizontal trendline that stretches back to the stock’s April 2020 pandemic recovery an area that may attract buying interest around $318.

The comments, opinions, and analyses expressed on Investopedia are for informational purposes only. Read our 澳洲幸运5官方开奖结果体彩网:warranty and liability disclaimer for more info.

As of the date this article was written, the author does not own any of the above securities.