WASHINGTON (Reuters) - The nominee to lead a key healthcare agency said on Tuesday that the agency was investigating events surrounding a decision on Medicare Advantage payment rates that sent shares of insurance companies soaring.
Marilyn Tavenner was asked about the April 1 rate decision at a Senate confirmation hearing by Republican Senator Charles Grassley of Iowa, who has said the rate decision might have been leaked to Height Securities, an investment research firm.
“We have initiated an internal review. And it will be extensive,” Tavenner said. “I’ve also asked that the Office of the Inspector General be brought in on this issue as well.”
Tavenner was nominated by President Barack Obama to become administrator of the Centers for Medicare and Medicaid Services. She has been acting administrator since 2011.
The CMS is a federal agency that administers the Medicare program and works with state governments to administer Medicaid and the State Children’s Health Insurance Program.
Grassley’s queries were based on an April 3 Wall Street Journal report that stock market gains on April 1 were due to a report by Height Securities, saying the announcement would favor insurers.
The firm sent an advisory to its clients 18 minutes before the close of trading on April 1, and before CMS released its decision publicly, Grassley said.
In those 18 minutes, he said the share prices and traded volumes of insurers Humana Inc, UnitedHealth Group Inc and Aetna Inc soared.
“The consequence of a political intelligence firm having access to this information 18 minutes before the market closed is astonishing,” Grassley said.
“I hope you’ll agree that ultimately, you’re responsible. What are you going to do to hold somebody accountable for this leak?” Grassley asked Tavenner, who responded, “I do not consider this a small issue. I consider this a huge issue.”
Height Securities did not immediately respond to a Reuters request for comment.
Additional reporting by David Morgan in Washington and Caroline Humer in New York; writing by Ros Krasny; editing by Lisa Von Ahn and Matthew Lewis