The Securities and Exchange Commission, pictured, and the Justice Department are investigating whether Wall Street investors had advance access to inside information about a then-confidential Medicare funding plan. (Joshua Roberts/Bloomberg)

Hundreds of federal employees were given advance word of a Medicare decision worth billions of dollars to private insurers in the weeks before the official announcement, a period when trading in the shares of those firms spiked.

The surge of trading in Humana’s and other private health insurers’ stock before the April 1 announcement already has prompted the Justice Department and the Securities and Exchange Commission to investigate whether Wall Street investors had advance access to inside information about the then-confidential Medicare funding plan.

Sen. Charles E. Grassley (R-Iowa) told The Washington Post late last week that his office reviewed the e-mail records of employees at the Department of Health and Human Services and found that 436 of them had early access to the Medicare decision as much as two weeks before it was made public.

The number of federal employees with advance knowledge is surely higher; the figures Grassley’s staff compiled did not include people at the White House’s Office of Management and Budget who also saw the information. The e-mail records of those employees have not been made available to Grassley.

The discovery that sensitive information was so widely disseminated could complicate the forensic task for investigators trying to determine who may have leaked confidential information, and it brings further attention to the government’s handling of policy details valued by Wall Street traders.

“This should sound an alarm,” Grassley said. “It should result in better controls to avoid unfair access to information that the average investor could never tap.”

Tracing leaks of confidential financial information can be especially challenging in official Washington, where Congress and the executive branch — along with the reporters and lobbyists who track them — are accustomed to a relatively unfettered exchange of information, compared with the more regulated environment on Wall Street.

The potential sensitivity of such exchanges was brought home for Grassley last month, when the Justice Department hand-delivered to his office a letter asking for details about a staff member’s communications with a former staffer. That former Grassley staffer was a lobbyist who occasionally worked in the burgeoning field of “political intelligence,” which specializes in providing government information to investors for a fee.

Grassley has led calls in the Senate for more scrutiny of that field, and he has said he plans to introduce legislation that would require political-intelligence consultants to disclose their activities, as lobbyists are required to do.

The Centers for Medicare and Medicaid Services (CMS) made the April 1 decision to increase funding to the private-sector Medicare Advantage program by $8 billion. Officials there did not dispute Grassley’s tally of how many employees had advance word but said the complexity of Medicare policy requires wide and careful review.

“CMS takes the security and integrity of sensitive information very seriously,” Brian Cook, a spokesman for the centers, said in a statement. “Our agency regularly handles sensitive information regarding payment rates, coverage decisions, and other technical policy decisions that need to be safeguarded until public release.”

The agency officials said they take care to safeguard information and carefully vet which employees have access to it. Employees are educated regularly about the need for confidentiality, and CMS documents are often stamped with warnings about early disclosure.

A former director of the Medicare program, Thomas Scully, said he was not surprised that hundreds of people had access to the decision, given the complexity of the matter. He favors more communication between the agency and Wall Street, but he said that more care needs to be taken about what is discussed.

“There are plenty of people at CMS who, wanting to be cooperative and friendly, may have given out information without realizing it could benefit one investor versus another,” Scully said.

While many federal agencies take steps to prevent early disclosure of potentially market-moving information, there are wide variations among departments, said Kathleen Clark, a professor at Washington University School of Law.

“The Labor Department literally puts in place physical constraints on the information rather than just stamping ‘confidential’ on it,” Clark said. “They know to be concerned about the fact that advance access could advantage some people over others.”

The roughly two dozen Labor Department economists who calculate the monthly unemployment and jobs figures are typically locked down for a one-week stretch as they prepare information for public release, with limited access to their other colleagues.

“In the statistical agencies, where the handling of sensitive information is their bread and butter, they’re very serious about confidentiality,” said Keith Hall, a former commissioner at the Bureau of Labor Statistics who has spent more than two decades in government. “But in other parts of the government that handle policy issues, there’s a whole different level of treatment.”

Hall said employees in other parts of the government, including the Medicare office, are not subject to the same types of potential consequences as employees at statistical agencies, who can land in prison for up to five years and face a fine of a quarter of a million dollars for disclosing information early.

Giving hundreds of government employees advance notice of a policy decision “is way too many,” said Hall, now a senior fellow at George Mason University’s Mercatus Center. “I’ve done my share of working on policy issues and policy decisions, and you just don’t spread that stuff around like that.”

Even the most sensitive details can spread quickly in the porous environment of Capitol Hill.

The Justice Department letter sent to Grassley’s Senate office last month asked that Grassley staffer Rodney Whitlock provide e-mails and other information about his contacts with former staffer Mark Hayes, according to people familiar with the letter. Hayes had worked on health-care issues with Whitlock.

After Hayes left Grassley’s office, he joined the law firm of Greenberg Traurig, where he was a lobbyist for Humana and had a contract to provide political intelligence to a Washington brokerage. Hayes sent an e-mail to an analyst at that brokerage, Height Securities, signaling the likelihood of the Medicare funding plan before the Obama administration made it public. The analyst then alerted brokerage clients, and some health insurance companies’ stocks soared.

Hayes, his law firm and the analyst have since been subpoenaed by federal investigators, according to people familiar with the probe. All declined to comment for this story.

Grassley and his staff said Whitlock — who is asked to consult occasionally with Grassley investigators on health-policy matters — did nothing wrong. “Before the Medicare Advantage stock spike, Rodney and Mark talked regularly, as might be expected, given their positions,” said Grassley spokeswoman Jill Gerber.

In the weeks before April 1, the two men communicated on separate occasions about health-care policy issues, including the coming Medicare decision. But Gerber said Whitlock “had no advance notice of the Medicare Advantage decision” and did not know that Hayes had anything to do with providing information to a Washington brokerage until it was reported publicly after April 1.

Grassley’s investigators have interviewed Hayes and private-sector political-intelligence consultants. But Grassley made clear Friday that while the SEC continues to investigate who made large trades in advance of the Medicare announcement, he will focus on adding transparency to the political-intelligence-gathering process, including asking more about “how the government handles market-sensitive information.” That kind of data, he said, “should be available to everyone at the same time, not handled loosely in a way that allows special access to some individuals.”