Humana Appeals CMS Over Medicare Advantage Star Ratings Dispute

Humana has filed an appeal with the U.S. Court of Appeals for the Fifth Circuit against the Centers for Medicare and Medicaid Services (CMS) regarding its Medicare Advantage star ratings. The star ratings, particularly those at or above four stars, carry significant financial implications as they determine bonus payments to insurers. Humana's initial lawsuit contested CMS's calculation methods for star ratings, claiming potential errors in industry cut points that adversely affected its ratings and resulted in a loss exceeding $1 billion in bonuses. Specifically, one of Humana's contracts experienced a downgrade from a 4.5-star to a 3.5-star rating for the 2024 plan year. Humana's subsequent lawsuit challenged CMS's evaluation process based on three customer service test calls. The insurer argued that CMS enforced its no-callbacks policy unfairly, penalizing call centers disconnected before assisting members, which contradicted CMS's own regulations. However, a federal judge ruled against Humana, holding that CMS's measures were neither arbitrary nor unlawful and noting that Humana had not completed the administrative appeals process. CMS rejected Humana's prior appeals seeking improved star ratings. This legal dispute occurs amid fluctuations in Medicare Advantage plan ratings. Recent data from CMS shows 34 Medicare Advantage plans achieving a 5-star rating for the 2026 plan year, a considerable increase from the previous year. These star ratings are crucial metrics for Medicare Advantage insurers as they influence market competitiveness and financial incentives. The ongoing litigation highlights the complex regulatory environment surrounding Medicare Advantage star ratings and the significant financial stakes insurers face in the process. It also underscores CMS’s strict oversight and procedural standards in evaluating plan performance and compliance, with substantial implications for Medicare Advantage plan providers and their operational strategies.