Humana Shares Plummet After Losing Medicare Star Ratings Lawsuit

Humana has reportedly lost a lawsuit challenging its 2025 Medicare Star Ratings cut, leading to a session low in shares. The managed care firm's 2025 Medicare Star Ratings cut has been challenged, resulting in the lawsuit. The outcome of the lawsuit could impact Humana's performance and stock price.

Humana Inc. (NYSE: HUM) shares plummeted to a session low on July 2, 2025, following a court ruling against the managed care firm in its lawsuit challenging its 2025 Medicare Star Ratings cut. The ruling by a Texas district court affirmed the Centers for Medicare & Medicaid Services' (CMS) downgrade of Humana's quality ratings, which will likely impact the company's profits in 2026.

The lawsuit, filed by Humana, contested the preliminary 2025 Medicare Advantage Star Ratings data, which showed that members enrolled in Humana's plans rated four stars and above had declined to 25% from ~94% in 2024. Humana argued that there may have been errors in the calculation conducted by CMS, which could amount to billions in revenue if reversed.

The court's decision to dismiss Humana's case means that the company will not receive the Medicare bonus payments it had sought to restore. Medicare Advantage plans, which are privately managed alternatives to traditional Medicare, represent a significant portion of revenue for major health insurers. The government uses a star-rating system to evaluate plan quality, with higher ratings qualifying insurers for bonus payments.

The ruling has also had an impact on other health insurers, with CVS Health (NYSE: CVS) and UnitedHealth Group (NYSE: UNH) shares declining as well. The decision underscores the importance of maintaining high-quality ratings in the competitive health insurance market.

Investors should closely monitor Humana's financial performance and stock price in the coming quarters, as the outcome of the lawsuit could have significant implications for the company's profitability.

References:
[1] https://seekingalpha.com/news/4468905-humana-loses-medicare-star-ratings-lawsuit
[2] https://www.investing.com/news/stock-market-news/humana-stock-falls-after-losing-medicare-bonus-payment-lawsuit-4142079