Humana’s Medicare Advantage Star Rating Decreases
Humana has recently experienced a decline in its Medicare Advantage star rating from the Centers for Medicare & Medicaid Services (CMS), following a trend of higher member departures than anticipated and fewer new enrollments.
For 2025, only 25% of Humana’s members will be enrolled in plans rated 4 stars or higher, a significant drop from 94% in 2024. The Medicare Star Rating System evaluates the quality of Medicare Advantage and Medicare Part D plans on a scale of 1 to 5 stars, with 5 stars indicating top quality.
CMS assesses these plans on various criteria, including Customer Satisfaction, Management of Chronic Conditions, Preventive Care, Member Complaints, Plan Performance, and Drug Plan Quality. Plans earning at least 4 stars are recognized as high-quality, while those rated below 3 stars may face regulatory scrutiny.
In addition, Humana’s Medical Loss Ratio (MLR) rose to 89.8% in 2024, up from 87.3% in 2023, signaling increased costs in relation to premiums, largely due to a rise in hospital and outpatient visits. Consequently, the company plans to reduce its Medicare Advantage membership by around 10% in 2025, which equates to roughly 550,000 enrollees, by eliminating unprofitable plans and counties.
Interestingly, I believe this shift could lead to increased job opportunities in certain sectors. It appears to indicate a focus on cost management, necessitating insurers to hire additional compliance analysts, data reporting specialists, and quality improvement teams to navigate an increasingly complex regulatory environment.
Demand for professionals skilled in medical cost containment, healthcare analytics, and process optimization is likely to rise as insurers strive to manage their MLR and enhance profitability.
What are your thoughts on the implications of these changes over the next year?
Are you worried this trend could extend to affect other insurers as well?
You’ve made some insightful observations about Humana’s recent challenges and the broader implications for the Medicare Advantage landscape. The reduction in star ratings and the increase in Medical Loss Ratio (MLR) certainly signal a shift in how insurers must approach their operations and member care.
In the next 12 months, I think we could see several implications:
Increased Focus on Compliance and Quality: As you noted, insurers will likely ramp up hiring for compliance and quality improvement roles. This could create new job opportunities in healthcare, particularly for those skilled in data analytics and regulatory compliance. Insurers might also invest in technology solutions to enhance their reporting and quality assessment capabilities.
Market Consolidation: With some plans being deemed unprofitable, we may see further consolidation in the Medicare Advantage market. Smaller players might find it difficult to compete, leading to mergers or exits that could impact service availability in certain areas.
Potential for Higher Premiums: If Humana and other insurers respond to rising costs by increasing premiums or limiting benefits, beneficiaries could face higher out-of-pocket expenses. This might drive some members to reevaluate their choices, potentially leading to increased turnover as people search for more affordable options.
Spread to Other Insurers: It’s possible that Humana’s experience may serve as a cautionary tale for other insurers. If similar trends in star ratings and MLR emerge among competitors, we could see a broader reevaluation of plans and strategies across the industry.
Shift in Member Engagement: Insurers will need to enhance their member engagement strategies to retain existing clients and attract new ones. This could involve personalized care programs, improved customer service, or innovative wellness initiatives to enhance member satisfaction and health outcomes.
Overall, while the immediate outlook may seem challenging for Humana and potentially other insurers, there could also be opportunities for growth in areas like compliance, analytics, and member engagement. It will be interesting to see how the landscape evolves in response to these pressures and what strategic adjustments insurers implement to navigate this transition.