The Centers for Medicare & Medicaid Services (CMS) has denied Humana’s internal appeal to improve the insurer’s Medicare Advantage (MA) bonus ratings, according to a filing disclosed by Humana on Tuesday. The filing is part of Humana’s ongoing litigation against the Department of Health and Human Services (HHS), claiming that the government has arbitrarily calculated the scores. This decision, overseen by new CMS Administrator Dr.
Mehmet Oz, is set to become final on April 28. If the decision is finalized, it could result in significant financial repercussions for Humana, potentially costing the insurer billions in revenue for the next year. Analysts estimate that Humana could face a loss of $1 billion to $3 billion in 2026 due to the lowered star ratings.
These ratings, which impact competitive bidding and federal bonuses, plummeted from 4.37 in 2024 to 3.63 in 2025, affecting Humana more than any other major MA insurer. The changes in star ratings were part of adjustments made by regulators in the Biden administration. These modifications had a relatively mild impact on overall ratings but significantly affected Humana.
Humana appeal for Medicare star ratings
The decline in ratings has been linked to the revised calculation methodologies. Humana’s lawsuit is among several filed by insurers unsatisfied with changes to their star ratings.
Despite similar suits yielding score adjustments for other companies like UnitedHealth and Centene, Humana’s ratings remained unchanged. The CMS’s rejection of Humana’s internal appeal complicates its own arguments that the Texas court should dismiss Humana’s case on the grounds that administrative options had not been fully exercised. Humana contends that the CMS’s arguments are unjust, as internal appeals are meant to address calculation errors or data mistakes rather than the fundamental rules and methodologies determining star ratings.
With the deadline for settling the internal appeal approaching on April 28, Humana has requested a final judgment no later than April 30, 2025. As the second-largest MA insurer in the country, Humana has already been struggling with rising member utilization costs surpassing reimbursements in the privatized Medicare program. The company has experienced a notable drop in profit, reporting significantly lower earnings compared to previous years.
The outcome of this appeal and subsequent legal actions will be critical for Humana as it navigates the changing regulatory landscape and its financial implications.