WASHINGTON | Mon Apr 4, 2011 5:41pm EDT  - U.S. health insurers offering private Medicare Advantage plans will see an average net 0.4 percent increase in federal reimbursements next year, the Centers for Medicare and Medicaid Services said on Monday.

The increase is lower than the 1.6 percent net increase proposed in February by the agency that runs the nation's health insurance plan for the elderly and disabled.

Jonathan Blum, deputy administrator and director at the Centers for Medicare and Medicaid Services, said the lower reimbursement rate reflects economic changes since the February proposal and does not indicate any Medicare policy adjustments.

The net rate increase is an average. It will vary by plan depending on geographic location and their quality star rating, Blum said.

"We believe that the final rates being announced will continue to see a very stable and very attractive Part C program for 2012," Blum said in a telephone conference call with reporters.

Medicare Advantage plans are run through private health insurers and offered as an alternative to traditional fee-for-service Medicare plans. Supporters say they are more efficient and offer better services for less money, but critics charge the government pays more for the plans than for traditional Medicare.

Humana Inc and UnitedHealth Group Inc are the biggest providers of Medicare Advantage plans, along with HealthSpring Inc. Other providers include Aetna Inc, Cigna Corp Coventry Health Care Inc, Health Net Inc and WellPoint Inc.

Last year's health law calls for changes to Medicare Advantage rates to bring them more in line with traditional Medicare and save the government money. Analysts have said those changes are not likely to kill off the plans, but could lead to consolidation in the industry.

(Reporting by Donna Smith; editing by Andre Grenon)

© 2010 Thomson Reuters. Click for Restrictions

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