Updated: July 21 at 4:14 ET
Just three days after a federal judge ruled against Humana's Medicare Advantage star ratings challenge, the insurer is once again taking its qualms to court.
Humana is likely to prevail in the lawsuit (PDF), a quick analysis from independent strategy firm Capstone says.
"That said, the case will now be heard by Judge Terry Means, who is a less industry-friendly and more procedurally focused judge than Judge O'Connor, which may pose issues," the analysts warn.
The insurer is requesting an expedited decision before the upcoming open enrollment season.
Humana is suing the Centers for Medicare & Medicaid Services (CMS) over fewer arguments than in its first case. Judge O'Connor previously said the company did not exhaust the administrative appeals process, and Humana claimed calculations around cut points, a technical standard directly influencing star ratings scores, were unfair.
The newer, less extensive lawsuit doesn't take issue with the star ratings process as broadly, but the company maintains its complaints over the agency's handling of three customer service phone calls. Two phone calls were disconnected early and a third was classified incorrectly, Humana said.
"Notably, Humana chose to remove its 'subdelegation of authority' argument from its refiled complaint," said Capstone analysts. "This decision is likely in light of the recently decided Supreme Court case FCC v. Consumer Research, which upheld that agencies can lawfully subdelegate authority."
The Department of Justice or the CMS is expected to respond.
Updated: July 18 at 11:43 a.m. ET
A federal judge dismissed a lawsuit from Humana challenging the company's Medicare Advantage star ratings scores.
Humana previously alleged the Centers for Medicare & Medicaid Services (CMS) mishandled three phone calls, adversely impacting the insurer's star ratings. These ratings are crucial to attracting, and retaining, members. The company wanted 29 contracts and its related quality bonus payments to receive another look from the federal agency.
"At the time of filing this lawsuit, plaintiffs did not exhaust the administrative appeals process," the court said (PDF) in the opinion.
Health plans have had mixed success fighting CMS star ratings scores in court. Most recently, Alignment Healthcare was able to increase its star ratings from 3.5 to 4.0 stars for its Arizona HMO plans, but Florida Blue's scores did not improve after claiming the company shouldn't have been dinged due to extreme environmental circumstances.
Humana's stock is down about 3% Friday.
Updated: April 17 at 3:25 p.m. ET
The Centers for Medicare & Medicaid Services (CMS) has rejected an administrative appeal by Humana over the company's star rating quality bonus payments scores, the insurer stated in a court filing this week.
The decision will become "final and binding" by April 28, and a CMS officer has until that date to modify the denial notice.
Humana, one of the country’s largest Medicare Advantage organizations, had sued the CMS over its annual star ratings results. In its lawsuit with nonprofit trade association Americans for Beneficiary Choice, the insurer said the federal government's “arbitrary” actions violate the Administrative Procedure Act.
Humana informed the court of its rejection in light of CMS' prior motion for the court to dismiss Humana's lawsuit, which it had filed because the administrative claims process was not yet completed by the company.
An administrative appeal was never going to prove fruitful, Humana argued (PDF), because the company is claiming the CMS' methodology is unfair, not that CMS incorrectly calculated its scores. The insurer also claims an "unconstitutionally-delegated contractor" carries out the CMS regulations and methodology.
The company is now asking for judgment expeditiously.
“The data and calculations underlying the annual star ratings are dizzyingly complex, and at a first glance, this suit may appear to be a dry disagreement over technical details,” the health plan said. “It is anything but.”
Humana argues the CMS is not following its own regulations by not disclosing all star ratings recalculation criteria and cooperating with the company’s questions, as well as calculating two star ratings measures incorrectly.
"Humana’s decision to take this legal action came only after careful consideration," a spokesperson told Fierce Healthcare. "We believe this litigation is in the best interest of Humana members and is necessary to ensure star ratings are accurate, trustworthy and representative of plan quality."
Under this year’s star ratings, 94% of Humana’s MA enrollees were in four-star plans or better. For 2025, only one-quarter of its members will be in similarly valued plans because cut point thresholds, or the metrics plans must meet, increased sharply. More broadly, 18.71% of enrollees were in 3.5-star plans in 2023, versus 27.71% in 2025.
UnitedHealth Group recently sued the CMS, claiming one customer service phone call unfairly tanked the company’s star ratings. Humana’s lawsuit argued three phone calls were scored unfairly.
Two phone calls were disconnected early due to third-party internet connection interruptions, but CMS callers do not accept callbacks. Another call was categorized incorrectly, Humana said, because no one on either end communicated, but the insurer was still penalized.
Strategy firm Capstone believes the lawsuit is a smart move by Humana, an analyst note shared with Fierce Healthcare shows. The filing occurred in the District Court for the Northern District of Texas with business-friendly Judge Reed O’Connor.
Humana says it was not able to review and validate the CMS’ scores, a common practice, the insurer argues, related to the government’s handling of recent industrywide star ratings complaints. Humana said it could not replicate 60% of CMS’ cut point calculations once the final star ratings were released. If scored incorrectly, even small variations can have significant financial ramifications.
Two other insurers, Elevance Health and SCAN Health Plan, already successfully won star ratings lawsuits against the feds.
Plans that receive higher star ratings are subject to greater rebates from the CMS, helping attract and retain beneficiaries to its plans.