Humana Challenges CMS Star Ratings Over Phone Call Disconnections Impacting Revenue

What's Happening?

Humana has filed a lawsuit against the Centers for Medicare & Medicaid Services (CMS) in a Texas court, contesting its 2025 star ratings due to three disconnected phone calls. These calls are part of the CMS star ratings system, which evaluates Medicare Advantage plans based on various criteria, including customer service. The ratings influence bonus payments that can amount to billions of dollars annually. Humana argues that the disconnections were due to third-party internet issues and CMS's handling of the calls was inconsistent with its regulations. The insurer is seeking a recalculation of its ratings before the Medicare enrollment period begins on October 15. CMS plans to release its 2026 star ratings next month, and Humana's disappointing results could potentially lead to a $3 billion revenue loss.

Why It's Important?

The lawsuit underscores the significant financial implications of CMS star ratings for insurers offering Medicare Advantage plans. These ratings not only affect consumer choice but also determine substantial bonus payments, impacting the revenue and competitive positioning of insurers like Humana. The case highlights the tension between regulatory compliance and operational challenges faced by insurers in maintaining high service standards. As Medicare Advantage plans continue to grow, surpassing traditional Medicare in enrollment, the stakes for accurate and fair ratings are increasingly critical for insurers' financial health and market strategy.

What's Next?

The court's decision on Humana's request for a recalculation of its star ratings could set a precedent for how CMS handles similar disputes in the future. If Humana succeeds, it may prompt other insurers to challenge CMS ratings, potentially leading to changes in the evaluation process. The outcome could also influence CMS's criteria for future ratings, affecting the distribution of bonus payments across the industry. Stakeholders, including other insurers and consumer advocacy groups, will be closely monitoring the case for its implications on Medicare Advantage plan evaluations and consumer choice.

Beyond the Headlines

The lawsuit raises broader questions about the transparency and fairness of the CMS star ratings system. It highlights the need for clear guidelines and consistent application of criteria to ensure that insurers are evaluated equitably. The case also points to the challenges of integrating technology and customer service in healthcare, as insurers must navigate technical issues while maintaining compliance with regulatory standards. The outcome could drive discussions on improving the star ratings system to better reflect the quality of care and service provided by Medicare Advantage plans.