Judge Upholds CMS Star Rating Methodology in Humana Medicare Advantage Dispute

A federal judge ruled in favor of the Centers for Medicare & Medicaid Services (CMS) in a lawsuit filed by Humana over its Medicare Advantage star ratings.

The dispute centers on CMS's enforcement of a no-callback policy during foreign language interpreter availability tests for Humana's call centers, which affected Humana's 3.5-star rating. The judge determined that the CMS policy is legal and that the star rating decisions were neither arbitrary nor capricious. This ruling comes just before Medicare's open enrollment period and holds significant financial implications for Humana. Analysts estimate that Humana could lose more than $1 billion in revenue next year due to lower star ratings, which impact bonus payments and competitive positioning in Medicare Advantage.

Despite the setback, Humana has expressed commitment to improving its star ratings and indicated it is considering all legal options, including a potential appeal. The insurer had prepared for an unfavorable ruling by submitting 2026 Medicare Advantage bids without relying on winning the case. The decision adds to recent challenges for Humana, the second-largest Medicare Advantage plan sponsor with 5.8 million members, as the percentage of its members in plans rated at least 4 stars dropped from 25% to 20% in the latest CMS ratings.

This ruling highlights the regulatory complexities and financial stakes tied to CMS star rating methodologies, which insurers must navigate to maintain competitive advantage and profitability in the privatized Medicare program.