Humana Appeals Medicare Star Rating Dispute Amid Regulatory Changes

Humana continues to pursue legal action against the Centers for Medicare & Medicaid Services (CMS) over its 2025 Medicare Advantage (MA) star ratings, particularly challenging the 3.5-star rating assigned due to interpreter availability test calls. The insurer argues that the CMS acted arbitrarily by not allowing callback opportunities during evaluations. Previous suits filed by Humana were dismissed due to procedural reasons and failure to exhaust administrative appeals. Recently, Humana has escalated the case to the 5th Circuit Court of Appeals, a venue often favorable to corporate disputes against regulatory bodies. This case highlights the broader trend of MA payers contesting star rating methodologies, which significantly impact bonus payments and market competitiveness of MA plans. Regulatory adjustments during the Biden administration aimed to address inflated star ratings by accounting for outlier performance and removing certain adjusters, resulting in generally lower ratings across the industry. However, these changes have also prompted operational and strategic shifts among payers preparing for more stringent evaluations. Looking ahead, a recently proposed rule under the previous administration intends to eliminate several star rating measures considered redundant, including the call center performance metric central to current lawsuits from Humana and other MA providers like UnitedHealthcare and Elevance. The rule also reinstates a bonus system for high-performing plans, reversing a scheduled phase-out and potentially increasing MA plan payments by over $13 billion over ten years. Amid these ongoing legal and regulatory developments, CMS plans to intensify audit activities by enhancing technology and expanding its medical coding workforce to clear audit backlogs. Legislative discussions have also included potential reforms targeting pharmacy benefit managers (PBMs), reflecting continued scrutiny of various components influencing Medicare Advantage market dynamics. These multifaceted regulatory, legal, and policy shifts underscore the complexity and high stakes involved in MA star ratings and their influence on payer operations and Medicare program finances.