The Centers for Medicare & Medicaid Services (CMS) dealt a blow to UnitedHealth Group (NYSE: UNH) and Humana Inc. (NYSE: HUM) – the two largest Medicare Advantage (MA) administrators – by lowering their star ratings for 2025.
Broadly, MA plans are rated on a scale from one to five, and CMS has lowered those ratings for both UnitedHealthcare and Humana, in certain cases. For UnitedHealthcare, its call center rating was reduced by a point. Humana’s ratings also went down overall, sinking the majority of their plans below four stars.
Both companies are appealing the ratings, in one form or another. UnitedHealth Group has filed a lawsuit against CMS. Humana earlier this year also challenged CMS on its Risk Adjustment Data Validation (RADV) rule, which helps dictate how MA plans are paid.
UnitedHealthcare is claiming that its call center rating was downgraded based on an “arbitrary and capricious assessment.”
As the star ratings currently stand, they are likely to affect the financial performance of both companies. Humana’s stock, for instance, is down over 20% this week.
The financial standing of MA plans could affect home-based care providers in a number of ways. A worse off rate environment could mean more low rates for home health services. Providers hope, however, that plans will use home health care as a way to lower costs elsewhere.
Home care providers that help MA plans provide supplemental benefits to members could also be squeezed out, with less room to offer benefits in the first place.
At the same time, the troubles of Humana and UnitedHealth Group are relevant due to their direct involvement in home health care.
Humana owns CenterWell Home Health, one of the largest home health providers in the country. UnitedHealth Group owns LHC Group, another one of the largest home health providers in the country. UnitedHealth Group is also in the process of acquiring the home health giant Amedisys (Nasdaq: AMED).
Companies featured in this article:
