Bank Of America Reports On Sanction Removed From AET

Bank of America is maintaining its Neutral rating and its $48 price target on Aetna AET following news that CMS has removed the Medicare sanction from the company. In the report, Bank of America writes, “After the close, AET announced that CMS has lifted its Medicare marketing and enrollment sanctions. As a reminder, AET has been suspended from marketing and enrolling new individual Medicare Advantage and Part D members since April 2010 due to violations of certain Part D requirements (received a waiver for group business). On the Q1 call, AET said that it believed the sanction could be lifted “in the near term”, so the news is not surprising. However, the one wrinkle is that AET will not receive auto-assigned low-income subsidy Part D members for 2012, slightly reducing the benefit from the sanction being lifted.” AET closed yesterday at $42.75.