Humana Continues Legal Battle Over Medicare Advantage Star Ratings
Background of the Lawsuit
Humana remains committed to its legal efforts aimed at enhancing its Medicare Advantage (MA) star ratings, despite facing challenges in the courts. Just prior to the Thanksgiving holiday, Humana filed an appeal against an October court ruling. This lawsuit seeks to compel the government to recalculate the MA star ratings, which are crucial for determining Humana’s bonus payments in 2026. A Texas judge had previously deemed the Centers for Medicare & Medicaid Services (CMS) downgrade of Humana’s scores, based on unsuccessful customer service calls, as legal and justified. This ruling has significant financial implications for Humana, as it is expected to decrease the insurer’s revenue by an estimated $1 billion or more in the upcoming year.
Details of the Court Proceedings
In preparation for its MA plans in 2026, Humana operated under the assumption that it would not succeed in its star ratings lawsuit. Nevertheless, the company is unwilling to abandon its efforts, despite encountering major setbacks in court. The initial lawsuit was filed approximately one year ago, challenging a 3.5-star rating attributed to one call center’s performance after the CMS found that three interpreter availability test calls were unsuccessful. Humana contended that the CMS decisions were arbitrary, arguing that its center was not permitted to conduct follow-up calls.
In July, the Northern District Court of Texas dismissed Humana’s initial lawsuit, stating that the insurer had not exhausted its administrative appeals with the CMS. After the CMS declined to amend its ratings, Humana refiled the lawsuit, only to face another dismissal from the court. Currently, Humana is appealing to the 5th Circuit Court of Appeals, as indicated by a notice filed on Tuesday.
Implications of the Star Ratings
The 5th Circuit Court, known for its conservative leanings and inclination to favor corporate interests in cases alleging government overreach, has become a common recourse for payers dissatisfied with their MA star ratings outcomes. The stakes are high, as the star ratings, which range from 1 to 5 stars, serve as a critical measure of plan quality and directly influence bonuses and competitive standing within the privatized Medicare program.
Regulatory Changes and Future Prospects
Amidst concerns over inflated ratings, the Biden administration has sought to address outliers, resulting in increased difficulty for plans to achieve higher scores. These regulatory changes, alongside the loss of an adjuster during the COVID-19 pandemic, have left many payers grappling with lower star ratings in recent years. However, a potential turning point may be on the horizon.
The Trump administration recently proposed a rule that would eliminate twelve star ratings measures deemed unnecessary, including one focused on the performance of insurers’ call centers—the central issue in Humana’s lawsuit, as well as in similar lawsuits from rivals such as UnitedHealthcare and Elevance. Additionally, the CMS has reinstated a bonus system that enhances payments to payers with consistently high ratings, which was initially set to expire by 2027. These regulatory changes are projected to cost taxpayers over $13 billion in higher payments to MA plans over the next decade.