Humana Stock Plunges as Insurer's Medicare Plan Ratings Plummet

Shares of wellness security supplier Humana (HUM) plunged to their lowest level since 2020 aft a ample stock of its Medicare offerings were downgraded by nan Centers for Medicare and Medicaid Services (CMS).

Roughly 25% of Humana members, astir 1.6 cardinal people, are presently enrolled successful plans that person a 4-star aliases higher Medicare Advantage rating for 2025, according to preliminary data—a monolithic driblet from 94% successful 2024. 

Why Star Ratings Matter for Humana and Other Insurers

Humana could return a important gross deed if nan preliminary information stands erstwhile CMS releases its charismatic ratings later this month, arsenic higher prima ratings make prize payments for nan insurers that connection them.

The institution said it is "disappointed" pinch its capacity and suggested location whitethorn beryllium errors successful nan measurement nan ratings were calculated. CMS prima ratings reappraisal scheme capacity erstwhile a twelvemonth connected factors specified arsenic nan number of yearly screenings and preventive services offered, really agelong it takes to get an appointment, and title levels. 

“Humana is exploring each disposable options to mitigate nan expected 2026 gross headwind related to its 2025 Star ratings successful nan arena its challenges to nan results are unsuccessful,” nan institution said successful a regulatory filing Wednesday, noting nan changes are not expected to impact its outlook successful 2024 aliases 2025. 

Those options could see suing CMS, arsenic Elevance Health did successfully past year. The insurer was capable to retrieve money that was astatine consequence owed to little prima ratings.

Humana shares tumbled much than 17% successful intraday trading Wednesday, and person mislaid astir half of their worth since nan commencement of nan year.