Humana Inc. and UnitedHealth Group Inc. rose after congressional researchers said the U.S. Medicare program has the authority to raise payments to insurers.

A proposed 2.2% reduction in a rate that determines payment to private Medicare Advantage plans can be rescinded if officials assume Congress will block a 25% cut in physicians’ pay scheduled for next year. Medicare administrators have said they must take the annual cut into account when deciding Advantage plan rates, though Congress hasn’t followed through with the proposed doctor pay reductions for a decade.

The nonpartisan Congressional Research Service said in a memorandum this week that Kathleen Sebelius, the U.S. health secretary who oversees Medicare, has the authority to assume Congress won’t allow the cut in doctors’ pay. Doing so would improve the insurers’ payment rate by 4 or 5 percentage points, according to America’s Health Insurance Plans.

Humana gained 2.6% to $68.42 at 12:32 p.m. New York time yesterday, after earlier rising 4.7% for the biggest intraday gain for the Louisville, Kentucky-based company in more than seven weeks. UnitedHealth rose 1.6% to $56.51 after earlier advancing 2.5% for the Minnetonka, Minnesota- based company’s biggest gain in more than seven weeks.

Alex Kepnes, a Humana spokesman, and Tyler Mason, a UnitedHealth spokesman, didn’t immediately respond to messages asking about the memo.

To contact the reporter on this story: Alex Wayne in Washington at awayne3@bloomberg.net.

To contact the editor responsible for this story: Reg Gale at rgale5@bloomberg.net.

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