Humana sues to reverse cut to Medicare Advantage ratings

Humana Inc. sued U.S. health agencies seeking to reverse a cut to crucial Medicare quality ratings, linked to billions of dollars in revenue, that sent the company’s stock tumbling this month.

The lawsuit argues that the U.S. Medicare program was “arbitrary and capricious” in how it calculated the metrics for Humana’s health plans. The scores, known as star ratings, are linked to billions in bonus payments in future years.

The case was filed Friday in federal court in the Northern District of Texas before Judge Reed O’Connor, who has frequently ruled in favor of plaintiffs challenging government regulations. 

Humana’s surprise downgrade put its 2026 earnings targets at risk in what one analyst called a “worst-case scenario” for the Louisville, Kentucky-based insurer.

Other health insurance companies, including Elevance Health Inc., have successfully challenged negative Medicare quality scores in court. UnitedHealth Group Inc. has a similar challenge pending. Humana is the second-largest seller of private Medicare Advantage insurance plans, behind UnitedHealth.

Humana unsuccessfully asked officials “to provide greater transparency into their policies, practices and calculations” and fix errors before it filed the lawsuit, a company spokesman said in an email. A representative for the US Centers for Medicare and Medicaid Services didn’t respond to a message about the lawsuit Saturday.

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