Dive Brief:
- UnitedHealth expects to have roughly 78% of its Medicare Advantage enrollees in plans rated four stars or above next year, the healthcare behemoth disclosed Tuesday in a securities filing.
- The percentage of members in the high-performing plans — which yield valuable bonuses — has stayed largely flat compared to 2025, according to analysts. But it’s still a positive development for UnitedHealth, and a good sign for other managed care companies in MA, many of which have struggled to reach stricter star ratings thresholds.
- UnitedHealth’s stock rose roughly 9% over Tuesday’s trade following the disclosure, which also shared that the company plans to reaffirm its 2025 financial guidance in upcoming investor meetings.
Dive Insight:
The CMS rates MA plans from one to five stars based on a complex calculation of metrics that, overall, are meant to represent plan quality. Insurers jockey fiercely for higher ratings, which help their plans stand out for seniors shopping for privatized Medicare coverage — and translate directly to higher revenue from the government.
As such, insurers were generally unhappy with tweaks to star ratings methodology that tamped down on average scores for 2025, including by making it harder to reach the vaunted four-star cutoff. (Plans that receive an overall rating of four or higher receive higher bonus payments, and higher scores also result in larger rebates if plans submit bids below the CMS’ benchmark for the coming year.)
With billions of dollars in payments at stake, multiple insurers sued the government to get their ratings recalculated, with mixed results. And executives and investors in the industry have been waiting anxiously for signs of how the quality scores could come down for 2026. The CMS officially releases stars for the upcoming plan year in October, but allows plans to take a first look at their data. Payers’ second window to check out their preliminary results opened on Tuesday, and UnitedHealth is electing to share its early results with investors.
Having more than three-fourths of its more than 8 million MA members in plans with at least four stars is “consistent with our expectations and in line with historical performance,” UnitedHealth wrote in its securities filing.
Still, the results are better than some investors feared, especially amid concerns that thresholds to reach four stars could increase further for 2026.
“Our biggest takeaway is that we aren’t seeing a material upward shift in stars similar to last year,” J.P. Morgan analyst Lisa Gill wrote in a note Tuesday.
Major health insurers are currently hustling to boost margins in their MA businesses, as higher medical utilization among seniors and unfavorable policy changes cut into once-comfortable profits.
With an eye toward improving margins, payers — including UnitedHealth’s insurance division UnitedHealthcare — are culling unprofitable plans for next year. UnitedHealthcare expects to lose some 600,000 enrollees as a result of the plan exits.
Despite higher MA rates coming down the pike, where star ratings land is another major swing factor for insurers’ margin recovery plans — especially for insurers that have room for improvement in their scores.
Humana, the second-largest MA insurer after UnitedHealthcare, said during a second-quarter call with investors that it expects its star ratings to improve for 2026, though the company doesn’t plan to discuss its results until stars are officially released in October.
Elevance also said it wouldn’t explicitly comment on stars during an investor conference last week, though CFO Mark Kaye said the company was encouraged by its progress. Centene has also said it expects its stars to improve next year.
UnitedHealth, Humana, Elevance, Centene and CVS, the parent company of insurer Aetna, did not respond to a request for comment for this story by time of publication.
