### Humana Shares Plummet as Medicare Plan Ratings Decline

Shares of Humana, a leading health insurance provider, took a significant hit, plunging to their lowest levels since 2020 following the downgrade of a substantial portion of its Medicare offerings by the Centers for Medicare and Medicaid Services (CMS). According to preliminary data, only 25% of Humana members, approximately 1.6 million people, are currently enrolled in Medicare Advantage plans rated 4 stars or higher for 2025—a staggering drop from 94% in 2024.

The drop in ratings is a critical issue for Humana and other insurers, as higher star ratings are directly linked to bonus payments from CMS. The company has expressed disappointment with its performance, questioning the accuracy of the ratings calculations. Insurers’ performances are reviewed annually by CMS on various factors such as the number of annual screenings, preventive services offered, appointment availability, and complaint levels.

In a regulatory filing, Humana stated it is exploring all available options to address the expected revenue shortfall in 2026 due to the lower 2025 star ratings, should its challenges to the CMS results prove unsuccessful. The company is considering measures that could include legal action against CMS, similar to the successful lawsuit by Elevance Health last year, which recovered funds jeopardized by downgraded ratings.

Despite the rating setback, Humana’s outlook for 2024 and 2025 remains unchanged. However, the market reaction was swift and severe, with Humana shares falling more than 17% in intraday trading on Wednesday, contributing to nearly a 50% decline in value since the beginning of the year.