Humana Declines Following Preliminary Medicare Advantage Data

Humana’s stock dropped following the release of preliminary Medicare Advantage data.

According to the Centers for Medicare and Medicaid Services (CMS), which made preliminary 2025 Medicare Advantage (MA) Star Ratings available as of October 1, 2024, Humana Inc. has approximately 1.6 million members—representing 25% of its total enrollment—currently in plans rated 4 stars or higher for 2025, a significant decline from 94% in 2024. This decrease is largely attributed to contract H5216, which saw its rating fall from 4.5 stars in 2024 to 3.5 stars in 2025. H5216 encompasses around 45% of Humana’s MA membership, including over 90% of its employer group waiver plan (Group MA) members. The decline in Star ratings is anticipated to affect Humana’s quality bonus payments in 2026, with final details expected to be released by CMS around October 10.

Humana’s assessment of the preliminary CMS data indicates that the reduction in Star ratings resulted from narrowly missing higher industry benchmarks on several measures. The company believes there may be errors in CMS’s calculations regarding some of its results and industry threshold cut points. Accordingly, Humana has pending appeals concerning certain ratings and has requested additional information to ensure the accuracy of these calculations. The company plans to continue discussions with CMS to ensure that Star ratings accurately reflect the quality of its plans.

Although the company is pursuing appeals, it expressed disappointment in its performance and is implementing initiatives to improve operational discipline and regain an industry-leading Star rating as soon as possible. These efforts are expected to enhance performance across key metrics and improve quality bonus payments in 2027 and beyond. Key focus areas include bolstering member and provider engagement, improving customer experience, and strengthening technology integrations to achieve operational excellence. Additional details about these initiatives are expected to be shared in the coming months.

Humana is also evaluating various strategies to address the anticipated revenue challenges in 2026 due to its 2025 Star ratings, in case its appeals do not succeed. However, the 2025 Star results are not projected to impact the company’s financial outcomes or outlook for 2024 or 2025. Furthermore, Humana remains committed to reaching its individual MA margin target of at least 3%, although achieving this goal by 2027 now carries additional risk.

In conclusion, Humana is dedicated to maximizing its capabilities by focusing on continuous improvement, enhancing customer health, and driving long-term shareholder value.