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The government needs Medicare Advantage plans to help cut costs and reform health care, said Dan Mendelson, president of Avalere Health, a market analysis firm. The privately run plans negotiate reimbursement with providers to rein in costs, something regular Medicare does not do. Mendelson said government officials have to make sure Medicare Advantage providers are being fiscally responsible, but they also have to ensure that funding reductions don't hurt their business models. The actual rate changes that customers eventually see will vary, depending on factors like a plan's quality rating or where the plan is located. "It's like a calculus puzzle, I mean, there are six or seven variables at least," said Les Funtleyder, a health care strategist at the private equity fund Poliwogg. Among insurers, Humana's stock fell $4.98, or 6.4 percent, to $73.01 Tuesday, and UnitedHealth shares dropped 66 cents to $56.66, while broader trading indexes climbed slightly. Humana derives a larger portion of its revenue from Medicare Advantage than UnitedHealth.
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