Days after a federal judge struck down Humana's first lawsuit challenging Medicare Advantage star ratings, the insurer filed a new complaint against CMS, this time focusing on customer service phone calls rather than cut points.
What happened
Humana filed a second lawsuit against the Centers for Medicare and Medicaid Services over Medicare Advantage star ratings. The new complaint differs from the original lawsuit by focusing primarily on CMS' handling of three customer service phone calls rather than cut points. According to Humana, CMS call "surveyors" conducted an Accuracy & Accessibility Study where they placed test calls to evaluate centers' compliance with regulatory requirements. The insurer claims these three phone calls were handled by CMS in a manner inconsistent with the agency's own regulations, which lowered star ratings for at least a dozen of Humana's largest plans. The federal judge struck down Humana's original lawsuit because the company "did not exhaust the administrative appeals process" at the time of filing, though Humana had appealed to CMS and was rejected.
The backstory
In the star ratings released last fall, Humana members enrolled in 4-star plans or above reached 1.6 million, or 25% of all members for 2025, down from 94% enrollment in 2024. Humana's original lawsuit argued there may be potential errors in CMS' calculations of its results and industry cut points. The company said its reduction in star ratings was driven by narrowly missing higher industry cut points on a small number of measures. A driver of the lower star results was one contract decreasing to a 3.5-star rating from a 4.5-star rating in 2024. This Medicare Advantage (MA) contract contains approximately 45% of Humana's MA membership, including greater than 90% of its employer group waiver plan membership.
What was said
According to the court decision, at the time of filing the lawsuit, Humana "did not exhaust the administrative appeals process." Humana stated that CMS call "surveyors" place test calls to evaluate centers' compliance with regulatory requirements, and that these calls lowered the star ratings for at least a dozen of Humana's largest plans "on the basis of just three phone calls that were handled by CMS in a manner inconsistent with the agency's own regulations."
By the numbers
- Only 25% of Humana's members are enrolled in 4-star or higher Medicare Advantage plans for 2025, down from 94% in 2024
- Humana's H5216 plan contains about 45% of the insurer's Medicare Advantage membership and 90% of its employer group waiver plan membership
- The H5216 plan dropped from 4.5 to 3.5 stars
- Only seven plans received 5 stars for Parts C and D performance in the 2025 Medicare Advantage and Part D Star Ratings, compared with 38 contracts that received 5 stars in 2024
- Humana reported a 10% revenue increase in 2024 Q4 and full-year financial results
- Humana shares are down 50% from their 2023 peak
Why it matters
This lawsuit highlights how minor administrative processes can have financial consequences for major insurers. Three customer service phone calls evaluated by CMS affected star ratings for at least a dozen of Humana's largest plans, demonstrating how granular CMS oversight has become in the Medicare Advantage program. For Humana specifically, the drop from 94% to 25% of members in high-rated plans directly impacts the company's bonus payments and competitive positioning. With shares already down 50% from 2023 peaks due to rising healthcare utilization and insufficient rate increases, Humana cannot afford further financial penalties from low star ratings. The case also shows how the appeals process itself has become a battleground, with courts requiring insurers to fully exhaust administrative remedies before seeking judicial relief.
The bottom line
Humana's second lawsuit represents a shift from challenging broad methodology to targeting specific procedural failures by CMS. As Medicare Advantage star ratings become consequential for insurer profitability, expect more litigation focusing on the granular details of CMS evaluation processes rather than systemic challenges to the rating system itself.
FAQs
What are Medicare Advantage star ratings used for?
They influence federal bonus payments to insurers and serve as quality indicators for consumers choosing plans.
How can just three customer service calls affect star ratings?
CMS uses these calls as part of its evaluation metrics, meaning even limited interactions can have outsized effects on scores.
What is the Accuracy & Accessibility Study mentioned in the complaint?
It’s a CMS initiative that tests insurer call centers for responsiveness and regulatory compliance.
What are “cut points” and why did they matter in the first lawsuit?
Cut points are scoring thresholds for quality measures that determine a plan’s final star rating.
How does a drop in star ratings affect Humana financially?
Lower star ratings reduce eligibility for federal quality bonuses, hurting revenue and investor confidence.
