Investing.com — Shares of insurer Humana (NYSE:HUM) fell in premarket trading in the US on Wednesday, after data showed the share of members enrolled in a four-star Medicare plan or higher for next year sharply decreased.
Humana is a major seller of government-backed Medicare Advantage plans, which are intended for adults age 65 and older.
Preliminary figures from the Medicare Advantage Star Ratings, a measure of the performance of health and prescription drug plans conducted by the Centers for Medicare and Medicaid Services, showed that 25% of Humana members enrolled in plans with a 4-star rating or higher than in 2025 – down from 94% the previous year.
Much of this decline was due to the rating of Humana’s H5216 contract being downgraded from 4.5 to 3.5 stars, the company said in a regulatory filing on Wednesday. The plan covers approximately 45% of Humana’s Medicare Advantage customers, including more than 90% of its employer group waiver plan members, it added.
“The decline in Stars performance for 2025 will impact Humana’s quality bonus payments in 2026,” the company said. The Centers for Medicare and Medicaid typically award a quality bonus to health plans that earn 4 stars or higher.
Humana noted that details about the 2025 star ratings are expected to be formally released by the Centers for Medicare and Medicaid Services, or CMS, “on or about” October 10. It said the cut came from its plans “narrowly missing a higher cut in the sector”. points to a small number of measures,” adding that it believes CMS may have made possible calculation errors.
The group has open appeals regarding some of the results and has requested additional information to ensure the accuracy of the threshold calculations, the group said.
However, Humana said it was “disappointed with its performance and initiatives are underway aimed at improving operational discipline and returning to an industry-leading Stars position as quickly as possible.” The aim is projected by Humana to improve bonus payments “in 2027 and beyond”.
The ratings decline is not expected to impact Humana’s financial results or outlook for this year or 2025, but the company says it is taking steps to “mitigate” expected headwinds to 2026 revenue if its appeal does not proves to be successful.
In July, Humana said demand for medical care was higher than expected in the second quarter, fueling investor fears that a recent spike in medical costs for health insurers will not subside anytime soon.
Medical costs have skyrocketed across the industry since late 2023, when older adults began catching up on health procedures delayed by the COVID-19 pandemic. Government payments for managing health care for Medicare members have also been slow.
Related articles
Humana drops 23% as data shows membership in highly rated Medicare plans has declined
Lilly will invest $4.5 billion in a new factory in Indiana
Conagra Brands’ first quarter sales missed weak demand
