Humana Escalates Legal Battle Over Medicare Advantage Ratings, Facing Uphill Climb
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Despite repeated setbacks, Humana is continuing its legal fight to improve its Medicare Advantage (MA) star ratings, a crucial factor impacting its financial performance. The insurer appealed a recent court loss in late November, seeking to compel the government to recalculate its ratings for 2026 and potentially recover an estimated $1 billion in revenue.
A Texas judge previously affirmed the Centers for Medicare & Medicaid Services’ (CMS) decision to downgrade Humana’s scores based on unsuccessful customer service calls, a ruling with significant financial implications for the insurer. The outcome upheld scores poised to reduce Humana’s revenue by a substantial margin next year.
Preparing for the Worst, Fighting for Better
Humana reportedly prepared its 2026 Medicare Advantage plans anticipating an unfavorable outcome in the star ratings lawsuit. However, the company remains committed to challenging the CMS’s methodology, despite facing considerable legal hurdles.
The initial lawsuit, filed approximately one year ago, stemmed from a 3.5-star rating assigned to one of Humana’s call centers. The CMS determined that three test calls assessing interpreter availability were unsuccessful. Humana argued the decisions were “arbitrary and capricious,” claiming the agency did not allow the call center an opportunity to return the calls.
The Texas Northern District Court initially dismissed the suit in July, citing Humana’s failure to exhaust its administrative appeals process with the CMS. After the CMS declined to revise its ratings, Humana refiled the lawsuit, only to have it dismissed again by the court.
Appeal to the 5th Circuit: A Strategic Move?
Now, Humana is appealing to the 5th Circuit Court of Appeals, according to a notice filed on Tuesday. This circuit, based in Louisiana, has a reputation for siding with corporate interests in cases alleging government overreach. “The 5th Circuit is known for its conservative leanings and a willingness to scrutinize federal agency actions,” one analyst noted.
The pursuit of legal remedies regarding MA star ratings is becoming increasingly common among payers. These ratings, ranging from one to five stars, directly influence plan bonuses and competitive positioning within the privatized Medicare program.
Regulatory Shifts and the Fight for Ratings
Recent regulatory changes have made achieving high star ratings more challenging. Concerned about inflated ratings, the Biden administration attempted to account for statistical outliers, inadvertently raising the bar for top scores. These adjustments, coupled with the loss of an adjuster during the COVID-19 pandemic, have contributed to lower ratings for many payers in recent years.
However, a potential shift is on the horizon. Last week, the Trump administration proposed a rule that would eliminate a dozen star ratings measures deemed unnecessary by regulators. Critically, this includes a measure focused on call center performance – the very issue at the heart of Humana’s lawsuit, as well as similar legal challenges brought by UnitedHealthcare and Elevance. The CMS also plans to reinstate a bonus system for plans with consistently high ratings that was previously scheduled to expire in 2027.
The proposed rule changes are projected to increase taxpayer costs by over $13 billion over the next decade through higher payments to Medicare Advantage plans.
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