Dive Brief:
- A federal judge has thrown out a last-ditch effort from Humana to get the government to recalculate its Medicare Advantage star ratings for 2025.
- On Tuesday, Judge Reed O’Connor of the Texas Northern District Court ruled that the CMS acted legally in downgrading Humana’s stars based on unsuccessful customer service calls.
- O’Connor dismissed the case with prejudice, meaning it can’t be refiled but could still be appealed. A spokesperson for Humana said the company is “disappointed” with the ruling and is considering “all available legal options.”
Dive Insight:
The CMS rates plans in the privatized Medicare program from 1 to 5 stars on a variety of metrics meant to measure quality. One measure calculates whether insurers make foreign language interpreters available on their call centers to beneficiaries who don’t speak English. The CMS checks this by making test calls that require a translator and rating the calls as being completed successfully or unsuccessully.
One year ago, Humana challenged a 3.5 star rating that it 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.
O’Connor has now ruled on the merits of the suit, with the same outcome — a dismissal. The judge determined that the CMS’ no-callbacks policy is legal, and therefore the regulators’ ratings of the several dropped calls were not arbitrary or capricious.
Analysts estimate that Humana could lose out on upwards of $1 billion in revenue next year as a result of the drop, given star ratings are directly linked to valuable bonuses and a competitive advantage in MA.
“We are disappointed with the Court’s ruling but remain committed to delivering meaningful improvements to our Star measurements and returning to top quartile performance as quickly as possible,” a Humana spokesperson said over email.
“Millions of Americans choose Medicare Advantage because of its high-quality, affordable care. They deserve to have the quality of that care evaluated with consistency and integrity. We will consider all available legal options to ensure the Star Ratings calculated by CMS are accurate, consistent and representative of plan quality,” they added.
Humana could still appeal O’Connor’s decision. However, the insurer had planned for an unfavorable ruling: During its June investor day, Humana executives said they submitted MA bids for 2026 assuming they did not win the star ratings suit.
Still, the decision is the latest in a string of setbacks for Humana as the insurer, the second-largest in MA with 5.8 million members, works to improve shrinking margins in the privatized Medicare program.
The percentage of Humana members in plans rated at least 4 stars, a key cutoff that insurers strive to reach, dropped from 25% to 20% in 2026 star ratings released by the CMS last week.
