Major Insurer Sees Sharp Decline in Top-Rated Medicare Plans
Humana, a leading provider of government-backed Medicare Advantage plans, saw its stock prices dip in pre-market trading on Wednesday after releasing data that showed a significant drop in the proportion of its membership enrolled in high-rated plans for next year. The Medicare Advantage Star Ratings, a key performance metric conducted by the Centers for Medicare and Medicaid Services, revealed that only 25% of Humana’s members had signed up for plans with a rating of 4 stars or above in 2025, down from 94% in the previous year.
The decline was largely attributed to the downgrading of Humana’s H5216 contract from 4.5 stars to 3.5 stars, which accounts for roughly 45% of the company’s Medicare Advantage customers. This downgrade will impact Humana’s quality bonus payments in 2026, as the Centers for Medicare and Medicaid typically awards bonuses to health plans that achieve 4 stars or higher.
Humana expressed disappointment with its performance and attributed the decline to narrowly missing industry benchmarks on a few measures. The company has appealed the results and requested additional information to ensure the accuracy of the calculations. Despite this, Humana is taking steps to improve its operating discipline and return to an industry-leading position as soon as possible, with the goal of improving bonus payments in 2027 and beyond.
The ratings decline is not expected to impact Humana’s financial results or outlook for this year or 2025, but the company is preparing for a potential revenue headwind in 2026 if its appeals are unsuccessful. This news comes on the heels of Humana’s recent announcement that demand for medical care was higher than projected in the second quarter, stoking concerns about rising medical costs for health insurers.
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