Humana's stock took a tumble early on Wednesday after it revealed in a filing with the Securities and Exchange Commission that its Medicare Advantage star ratings had declined significantly.
The insurer said in the filing that based on preliminary 2025 MA data from the Centers for Medicare & Medicaid Services (CMS) just 1.6 million, or 25%, of its members are currently enrolled in plans with four or more stars for 2025.
The main culprit is a drop in the star ratings for one of Humana's key contracts, in which 45% of its members are enrolled. Star ratings dropped from a 4.5-star score to a 3.5 star, Humana said. This contract also represents more than 90% of the insurer's group Medicare Advantage plans.
Humana said that it expects the star ratings results to hamper 2026 revenues, though it is taking steps to address the issues to avoid this. Humana's shares were down by 15% at about 10:30 a.m. ET on Wednesday, with other major insurers such as Elevance Health and Cigna also trending down slightly.
In the filing, Humana said that the changes are likely due to updates in how CMS calculates the star ratings.