Humana sues CMS once more over Medicare Advantage star ratings

Only a few days after a federal judge struck down Humana’s lawsuit challenging the Medicare Advantage star ratings system, the insurer is once more suing the Centers for Medicare and Medicaid Services – again over star ratings, though this lawsuit differs somewhat from the first.

In the star ratings that were released last fall, 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. In its original lawsuit, Humana argued there may be potential errors in CMS' calculations of its results and industry cut points. The company’s reduction in star ratings was driven by narrowly missing higher industry cut points on a small number of measures. 

In its original lawsuit, Humana said it 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. 

In last week’s court decision, the court said that at the time of filing the lawsuit, Humana “did not exhaust the administrative appeals process.” Humana did appeal to CMS to improve the former’s Medicare Advantage star ratings, but CMS rejected that appeal.

Humana’s new lawsuit is simpler and doesn’t fixate on cut points, instead focusing on CMS’ handling of three customer service phone calls. An Accuracy & Accessibility Study, in which CMS call "surveyors" place test calls to evaluate centers' compliance with regulatory requirements, lowered the star ratings for at least a dozen of Humana's largest plans on the basis of just three phone calls that were handled by CMS in a manner inconsistent with the agency's own regulations, Humana said. 

WHAT’S THE IMPACT

Only seven plans received 5 stars for Parts C and D performance in the 2025 Medicare Advantage and Part D Star Ratings released by CMS last fall. This compares with 38 contracts that received 5 stars in 2024.

Preliminary data from last fall showed only about 25% of Humana's members are enrolled in Medicare Advantage plans rated with 4 stars or higher, down from 94% in 2024, according to Marketwatch. As the main reason for the ratings dip, Humana cited a drop in ratings for its H5216 plan, which fell from 4.5 to 3.5 stars. The plan contains about 45% of the insurer's Medicare Advantage membership and 90% of its employer group waiver plan membership.

Humana reported a 10% revenue increase in its 2024 Q4 and full-year financial results, but that was about the only bright spot. Rising healthcare utilization and insufficient CMS rate increases have affected Humana's profitability, with shares down 50% from their 2023 peak.

THE LARGER TREND

Humana followed UnitedHealth Group and Elevance last fall in filing a lawsuit against CMS and HHS over the star ratings results. All of the insurers cited a change in cut points as a major reason for their plans receiving lower star ratings this year over last.

UnitedHealth won its lawsuit in late 2024. CMS appealed and then dropped the appeal.