The judge rejects the continuation of the Medicare insurance as humana

Diving brief:

• A Federal Judge of Texas rejected Humana’s trial against the federal government seeking to improve its Medicare ADMAND star notes, in a significant loss for the insurer.
• Humana continued the CMS in October 2024 to reverse its quality scores, arguing that the agency had acted in a arbitrary and capricious manner in the demotion of notes, which are linked to billions of dollars in reimbursement, for 2025.
• However, the district judge Reed O’Connor judged on Friday that Humana had not exhausted administrative appeals before filing his pursuit.

Diving insight:

The decision of O’Connor, which sent Humana shares to lower 3% on Friday morning, depends on the calendar of the case.

Humana filed his trial before receiving the result of her call to the CMS. The agency informed the Court that she had refused Humana’s appeal in April, six months after Humana had filed her complaint in the Northern Texas District Court.

Consequently, “the federal prosecution of the complainants was premature and the dismissal without prejudice is justified,” wrote O’Connor in his order of July 18.

The decision is a radical blow for the insurer based in Kentucky, who waited for months on the outcome of the case – one of the many insurers upset by their stars. Originally, Humana asked O’Connor a decision by December, he could therefore take into account changes in her plan offers for the year of the 2026 contract.

Humana’s trial accused the CMS of playing quickly and cowards with cutting points, or the threshold to reach each star level; Do not let the insurer check its stars’ notes calculations; And lower your stars based on three telephone calls to allegedly poorly managed customer service.

The insurer wanted the judge forced the CMS to recalculate his notes, after his average star score increased from 4.37 in 2024 to 3.63 for 2025 – the greatest drop in any insurer of my major. Consequently, only 25% of the members of MA of Humana are in a plan with four or more stars this year.

This counts because the stars’ notes, which are intended to represent the quality and performance of the plan, are directly linked to the reimbursement in the private medicary plans.

Analysts believe that Humana – the second largest control payer in the country – could lose $ 1 billion at $ 3 billion in 2026.

Due to his dependence on government programs, Humana was particularly affected by the increase in use costs for members who have exceeded reimbursement. Confidence in its profit perspectives has also been a little disturbed in the midst of unfavorable policy changes and the rise of bad behavior in MA.

Humana reaffirmed her profits forecast in 2025 earlier this year and did not move on advice while some of her peers recognize the worsening of trends. However, it was before the result of the stars trial, which has major implications for Humana’s financial future, was published.

“If you put stars aside, we feel good in the underlying progress of the company. The challenge is of course to reconcile this with the results of the stars which are unknown,” said CEO Jim Rechtin in April.