Markets surge after insider tip prompts reform call

At issue is a private e-mail...

Height Memo

The Height memo outlined the firm’s belief “that a deal has been hatched to protect Medicare Advantage rates,” according to the copy received by Bloomberg News. The note suggested the deal may be aimed to “smooth the confirmation” of Tavenner, who President Barack Obama has chosen to head the CMS.

Tavenner is set to go before the Senate Finance Committee on April 9. The committee announced her confirmation hearing on April 2, a day after Medicare announced its rate decision.

The announcement by the CMS said a key rate used to determine payments insurers get for running the government’s Medicare Advantage plans would be boosted by 3.3 percent, instead of trimmed by 2.2 percent. The about-face by the Medicare agency came after insurers and Republican lawmakers complained that the Obama administration relied on faulty accounting assumptions in proposing the cut.

40 Minutes

While Medicare typically releases information after the market closes to prevent such stock swings, Height’s e-mail beat the closely guarded announcement by about 40 minutes, according to the memo recipient.

Height describes itself as a “privately-held capital markets firm that provides research, advisory and investment banking services,” according to its website.

Humana gained about 1.8 percent on April 1 before jumping as much as 9.5 percent after 3:40 p.m. and closing up 8.6 percent before the announcement. Humana gets 66 percent of its revenue and 58 percent of profit from Medicare Advantage, leading the industry, according to estimates by Cowen & Co. analysts.

Bloomberg News

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