### Medicare Advantage Insurers Claim Skewed Ratings Result in Massive Revenue Losses

Several major Medicare Advantage insurers, including Humana, Centene, and subsidiaries of UnitedHealthcare, have filed lawsuits claiming that their 2025 Medicare Advantage scores have been unfairly impacted by a small number of unsuccessful customer service calls. They argue that these diminished ratings could lead to substantial revenue losses, amounting to hundreds of millions of dollars.

The insurers have expressed concerns over the severity of the repercussions tied to these errors. Centene, in its lawsuit, estimates a revenue loss of $73 million due to these issues. The Medicare Advantage plans, which cover the majority of the 67.5 million Medicare-eligible individuals, are evaluated by the Centers for Medicare and Medicaid Services (CMS) using a five-star system that includes various metrics, such as call center performance and breast cancer screening rates. High scores in this system earn additional bonuses and rebates from the federal government.

Previous legal actions, such as those initiated by Elevance Health and Scan Health Plan over changes in the ranking process, have influenced the government's reassessment of plan ratings, resulting in significant financial gains for Elevance Health. Observing this success, other insurers have decided to pursue similar legal avenues, according to Betsy Seals, CEO of the Medicare Advantage consulting firm Rebellis Group.

Critics of the current rating system argue that it has historically overrated many plans, resulting in excessive bonus payments to insurers. The nonpartisan Medicare Payment Advisory Commission has highlighted the urgent need for reform, given that more than half of Medicare-eligible individuals are now enrolled in Medicare Advantage plans, a significant increase from 19 percent in 2007.

David Meyers, a health policy professor at Brown University, stated that the system appears fragile if a few customer service call issues can drastically affect the ratings. Regulatory changes and the end of certain pandemic-era rules have contributed to the reduction in highly-rated contracts, with only about 40 percent expected to achieve four or five stars in 2025.

Humana's lawsuit alleges that the calculation of star ratings is excessively complex and argues that the substantial drop in its ratings does not coincide with a decline in plan quality. The company claims that this rating drop could result in a nearly $3 billion reduction in bonus payments. Federal data and analysis from Cantor Fitzgerald predict a significant financial impact for insurers, especially considering that Humana and UnitedHealthcare together enrolled more than 15 million people in 2024.

The lawsuits also point to technical issues and the lack of transparency in the star rating process. UnitedHealthcare and Centene have similarly cited issues such as technical problems with third-party vendors and procedural missteps by government callers as reasons for their diminished ratings.

As the legal battles unfold, discussions about the efficacy and fairness of the Medicare Advantage rating system continue, highlighting the broader need for systemic reform. Critics and industry experts agree that while the rating system aims to ensure high-quality care, its current implementation may need significant adjustments to accurately reflect plan performance and ensure fair compensation for insurers.