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.