Humana is challenging lower Medicare Advantage star ratings for 2025

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Humana shares plunged on Wednesday after the insurer disclosed a sharp reduction in the number of members enrolled in high star Medicare Advantage plans.

Humana said it learned in preliminary data released by the Centers for Medicare and Medicaid Services that members enrolled in 4 star plans or above reached 1.6 million, or 25% of all members for 2025, down from a 94% enrollment in 2024.

Humana is challenging the results, according to an October 2 filing with the Securities and Exchange Commission.

There may be potential errors in CMS' calculations of its results and industry cut points, Humana said. Its reduction in star ratings was driven by narrowly missing higher industry cut points on a small number of measures. 

Cut points are the upper and lower thresholds for each measure that determine a plan's overall score, from 1-5 stars.

Humana believes a significant driver of its lower star results was one contract decreasing to a 3.5-star rating from a 4.5-star rating in 2024. The MA contract contains approximately 45% of Humana's MA membership, including greater than 90% of its employer group waiver plan membership, Humana said. 

"The company has outstanding appeals related to certain results and has requested additional information to ensure accuracy of threshold calculations," according to the SEC filing. "The company intends to continue to engage with CMS on these matters to ensure star ratings are accurate and representative of plan quality."

The 2025 Medicare Advantage Star Ratings are expected to be formally released by CMS on or around October 10.

Humana said it learned of its results in preliminary data released October 1 on the CMS Plan Finder.

WHY THIS MATTERS

CMS rewards plans that are rated 4 stars or higher with quality bonus payments. The decline in its stars performance for 2025 will impact Humana's quality bonus payments in 2026, the company said. 

"Humana is exploring all available options to mitigate the expected 2026 revenue headwind related to its 2025 star ratings in the event its challenges to the results are unsuccessful," Humana said. 

However, the 2025 star ratings are not expected to impact the company's financial results or outlook for 2024 or 2025, Humana said. 

In addition, the company remains focused on achieving its individual MA margin target of at least 3%, though said there is now more risk in its ability to fully achieve this result by 2027.

THE LARGER TREND

Despite ongoing appeal efforts, the company is disappointed with its performance and has initiatives underway focused on improving its operating discipline and returning to an industry leading stars position as quickly as possible, Humana said.

These initiatives are expected to impact performance across key measures and drive improved quality bonus payments in 2027 and beyond. 

Areas of focus include enhancing member and provider engagement strategies, improving customer experience and strengthening technology integrations to support operational excellence. 

The company said it is focused on continuous improvement and leveraging its differentiated capabilities to improve the health of its customers and drive long-term shareholder value.

Humana said it would provide additional detail regarding these initiatives over the coming months to further enhance its operating rigor.

Email the writer: SMorse@himss.org