Dive Brief:
Humana won’t give up on its legal bid to improve its Medicare Advantage star ratings, despite having little luck in the courts to date.
Just before the Thanksgiving holiday, Humana appealed its October loss of the lawsuit, which seeks to force the government to recalculate the MA star ratings that affect Humana’s bonus payments in 2026.
A Texas judge had previously ruled that the CMS’ downgrade of Humana’s scores based on unsuccessful customer service calls was legal and appropriate. The decision had big implications for Humana, given it upheld scores that were set to lower the insurer’s revenue by an estimated $1 billion or more next year.
Dive Insight:
Humana prepared its MA plans for 2026 assuming that it wouldn’t win the star ratings suit. Still, the insurer refuses to let the effort die despite significant setbacks in court.
Humana filed its first lawsuit roughly one year ago over a 3.5 star rating that the payer received for one call center’s performance after the CMS determined that three interpreter availability test calls were unsuccessful. The insurer argued that the decisions were arbitrary and capricious because the CMS didn’t allow its center to call back.
The Texas Northern District court dismissed Humana’s initial suit in July because the insurer failed to exhaust its administrative appeal with the CMS. After the CMS declined to change its ratings, Humana refiled the lawsuit — only to have it tossed once again by the court.
Now, Humana is turning to the 5th Circuit Court of Appeals, according to a notice filed on Tuesday. The conservative-leaning 5th Circuit, located in Louisiana, is known for disproportionately siding with corporate interests in cases of alleged government overreach.
It’s become an increasingly common practice for payers unhappy with their MA star ratings results to turn to the courts. Stakes are high, given the ratings, which run from 1 to 5 stars and are meant to serve as a measure of plan quality, have a direct impact on a plans’ bonuses and competitive positioning in the privatized Medicare program.
Concerned about inflated ratings, regulators in the Biden administration attempted to account for outliers, which had the side effect of making higher scores more difficult to reach. Those changes, combined with the loss of an adjuster during the coronavirus pandemic, have left payers coping with lower star ratings over the past few years.
But that downward slide could soon be ending. The Trump administration proposed a rule last week that would eliminate a dozen star ratings measures that regulators said were unnecessary — including one zeroing in on the performance of insurer’s call centers, the issue at the center of Humana’s suit (and cited in similar lawsuits from MA rivals UnitedHealthcare and Elevance). The CMS also reinstated a bonus system that raises payments to payers with consistently high ratings that was set to sunset by 2027.
The changes in the rule are expected to cost taxpayers more than $13 billion over a decade in higher payments to MA plans.
