Humana, Cigna star ratings fall, dragging down stocks for merger partners
Humana saw enrollment in plans rated four stars or higher fall to 37 percent compared to 71 percent in the prior year's ratings.
Humana's Louisville headquarters. (Google image)
Stock prices for Cigna, Humana, Anthem and Aetna wobbled on Wall Street Thursday after newly released star ratings for Medicare Part D and Part C plans showed mixed ratings for the insurers as they move closer towards their mergers.
On one hand, Aetna improved in its ratings, released by the Centers for Medicare and Medicaid Services on Wednesday. But merger partner Humana saw a sharp drop in its customers enrolled in four or five-star plans, which by proxy dragged down Aetna's share price on Thursday.
Humana saw enrollment in plans rated four stars or higher fall to 37 percent compared to 71 percent in the prior year's ratings, pushing the company's stock down close to 5 percent in morning trading.
[Also: Enrollment in 4 or 5-star Medicare Advantage plans rising, new star ratings show]
The company, however, said the ratings do not accurately reflect their plan quality, and boldly raised their full-year guidance to $9.50 per share.
"Bonus year 2018 Star Results do not fully reflect Humana's focus on quality care for its Medicare members," the company said on its website.
Aetna's star ratings showed the highest percentage of Medicare members enrolled in plans rated four stars among the other publicly traded insurers. CMS data showed 91 percent of Aetna's plans score four stars or more.
"Aetna is extremely proud of our strong Medicare star ratings which, in an increasingly competitive industry, reflect our commitment to increasing the number of healthy days for our members," Nancy Cocozza, president of Aetna's Medicare business, said in a statement.
[Also: Feds accuse Aetna/Humana attempting to derail merger challenge by blocking CMS defendants]
The star ratings are based on scores in a host of areas including controlling blood pressure in people with hypertension, controlling blood sugar in people with diabetes, body mass index assessments, member complaints, Part D appeals processing and decisions, and prescription drug price accuracy.
CMS pays bonuses to high-performing plans while penalizing low-performing plans based on these annual scores.
Cigna, which is also fighting to complete its merger with Anthem, saw only 20 percent of its beneficiaries enrolled in four-star or higher plans, which the company said can be attributed to a recent CMS audit. However, the company disputed the scoring.
"We do not believe that these Stars ratings reflect the quality offerings Cigna HealthSpring provides to beneficiaries," the company said in a statement. "We will work fully with CMS through their process to ensure that they have the information and analysis needed to calculate final Stars ratings that more accurately reflect our performance."
As for Anthem, its star ratings showed improvement. CMS said 51 percent of its Medicare Advantage members were in plans rated four stars or higher, compared to 22 percent in 2016.
[Also: Court order filed to spilt Anthem/Cigna trial into two dates]
"Our company has made it one of our highest priorities to continuously improve the quality of the Medicare Advantage plans we offer through advances such as an expanded service area and product portfolio. This not only means that our current members are receiving better service, but that our company is positioned for significant growth in this business segment in the future," CEO Joseph Swedish said in a statement.
All four companies are slated to defend their merger plans in court later this fall after the U.S. Department of Justice sued to block the deals over concerns that the mergers would stifle competition in the market.
Despite seeing share prices in early trading, most of the companies were trading closer to their open prices by late morning Thursday.
Twitter: @HenryPowderly
Contact the author: henry.powderly@himssmedia.com
