Humana and Cigna saw stock prices fall Wednesday after the CMS released its latest star ratings that showed declines in both insurers' Medicare quality measures. The companies said the lower ratings follow a recent CMS audit that resulted in sanctions for Cigna.
Overall, more Medicare Advantage programs received top quality ratings from the CMS for their 2017 plans than in previous years. The agency reported that nearly 70% of Medicare Advantage enrollees would be in plans that received at least four stars. However, the average star rating declined slightly, according to data released Wednesday.
Shares of Humana fell 5% Wednesday after CMS reported that the percentage of Medicare Advantage members in Humana plans with four stars or higher fell by half, from 78% a year ago to 37%. The insurer said it would appeal the ratings and raised its full-year guidance, arguing the scores do not reflect its current business.
Aetna, Humana's partner in a huge merger currently being challenged by the U.S. Justice Department, also saw its stock prices tumble despite Aetna's own star ratings, which grew 4 percentage points from last year. The CMS reported 91% of Aetna's members are enrolled in four-star plans.
Cigna, meanwhile, which has spent nearly a year trying to resolve problems in its Medicare Advantage plans, had only 20% of its members in plans rated four stars or higher. On Wednesday, Cigna shares fell 2.4% to $121.96.
"We do not believe that these stars ratings reflect the quality offerings Cigna HealthSpring provides to beneficiaries," the company said in a Securities and Exchange Commission filing. "We will work fully with the CMS through their process to ensure that they have the information and analysis needed to calculate final Stars ratings that more accurately reflect our performance."
The star ratings for the first time incorporated socio-economic information about plan enrollees. The change was announced after pressure from health plans and the release of studies showing patients eligible for both Medicaid and Medicare scored consistently worse than other enrollees on performance measures.
A total of 208 Medicare Advantage plans with prescription drug coverage for 2017 scored four stars or higher. They have a combined enrollment of about 68% of all enrollees. That is up from 179 plans in 2016 and 158 plans in 2015. The average star rating for all 364 contracts was four.
The performance of Part D standalone prescription drug plans also improved slightly. Almost half of the plans received at least four stars, representing about 41% of enrollees.
Enrollment in Medicare Advantage plans next year is expected to be at an all-time high of about 18 million, which is about one-third of all Medicare enrollees, according to the CMS.
Plans receive a star rating of one to five based on quality and performance measures in categories such as outcomes, patient experience and access. Plans that receive a score of four or higher receive a 5% bonus payment. Those that consistently receive less than three stars can be eliminated from the program.
The CMS levied sanctions against Cigna last year. That banned the company from marketing and selling its Medicare Advantage policies to new beneficiaries. The CMS said Cigna plans "posed serious threats to the health and safety of Medicare beneficiaries." For example, Cigna inappropriately denied medical care and prescription drugs to its members.
Earlier this week, Cigna announced the retirement of Herbert Fritch, who oversees its Medicare business, Cigna-HealthSpring.
Cigna faces other challenges as it, along with Anthem, which is trying to acquire Cigna, fend off an antitrust challenge. The two companies are accusing each other of breaching terms of their merger agreement, according to legal filings.
