RISE summarizes recent regulatory-related headlines.
2025 MA Star rating fallout: Humana’s stock drops, UnitedHealthcare sues CMS
Although the Centers for Medicare & Medicaid Services (CMS) likely won’t publicly release Star ratings for 2025 until October 10, two of the largest Medicare Advantage health plans in the country are bracing for the fallout based on the preliminary review of Star ratings, which CMS made available to plans on October 1.
Humana’s stock plunged after the release of a securities filing this week, in which the company revealed the impact of a drop in Star ratings for 2025. Although Humana said the 2025 Star results shouldn’t impact the company’s financial outlook for 2024 or 2005, it expects the rating drop will impact its quality bonus payments in 2026. Companies use the bonus payments to reinvest in plans and provide greater benefits to members.
Humana said in the filing that 25 percent of its members (1.6 million) will be enrolled in plans rated 4 Stars and above for 2025, a drop from 94 percent in 2025.
The drop is mainly due to one of its major plans seeing a drop from a 4.5 Star rating in 2024 to a 2.5 Star rating for 2025. The contract represents approximately 45 percent of Humana’s Medicare Advantage membership, including more than 90 percent of its employer group waiver plan.
Humana believes that the drop in Star ratings was due to narrowly missing higher industry cut points on a small number of measures. The company said it has appealed the findings to CMS based on potential errors in the agency’s calculations and industry thresholds cut points. Humana said in the filings that it “intends to continue to engage with CMS on these matters to ensure Star ratings are accurate and representative of plan quality.”
The company admitted it was disappointed with its performance and is working on initiatives to return to a higher rating as soon as possible. It said it will focus on enhancing member and provider engagement strategies, improving customer experience, and strengthening technology integrations to support operational excellence.
Meanwhile, UnitedHealthcare filed a lawsuit against CMS and the Department of Health and Human Services on Monday in the United States District Court for the Eastern District of Texas over the drop in Star ratings for 2025.
In the complaint, UnitedHealthcare said CMS downgraded its Star ratings based on an arbitrary and capricious assessment of how its call center handled a single phone call from a CMS test caller that lasted less than 10 minutes. It is urging the court to file an injunction to correct the rating before open enrollment begins October 15. Otherwise, the insurer said the downgrade will “misinform millions of current and potential customers,” deterring them from choosing UnitedHealthcare Medicare Advantage plans for 2025.
UnitedHealthcare said in the complaint that it uses a single call center, and the caller was routed to a French-speaking United customer service representative. The CMS test caller was connected to the representative, heard a voice, and said hello. During the call, which was connected for more than eight minutes, the recording picked up faint resulting and breathing sounds from the test caller, but the caller never asked the required introductory question. As a result, the customer service representative did not have an opportunity to respond. Although the caller was never put on hold, the representative disconnected the call after not hearing the introductory question within eight minutes of the call.
Although UnitedHealth asked CMS to invalidate the call during the first and second plan preview periods, CMS decided to keep the call in its sample for the call center measure and as a result, the company will see its Star ratings drop from a 5 to a 4 in 2025.
OIG audit: Emblem Health overpaid $130M in 2015 for high-risk diagnosis codes
A recent Office of Inspector General (OIG) Medicare audit finds that EmblemHealth received at least $130 million in net Medicare Advantage overpayments for 2015 for not submitting some diagnosis codes to CMS’ risk adjustment program in accordance with federal requirements. However, because of federal regulations limiting the use of extrapolation in RADV audits for recovery purposes to payment year 2018 and forward, OIG is only recommending a refund of $555,917 in net overpayments.
OIG sampled 200 enrollees with at least one diagnosis code that mapped to an HCC for 2015. EmblemHealth provided medical records as support for 1,220 HCCs associated with 199 of the 200 enrollees. The watchdog said it used an independent medical review contractor to determine whether the diagnosis codes complied with federal requirements.
Although most of the diagnosis codes submitted were supported in the medical records, 362 HCCs were not validated and resulted in overpayments. The unvalidated codes included 54 HCCs for more and less severe manifestations of the diseases. In addition, the audit uncovered the medical records supported diagnosis codes for 65 HCCs which Emblem Health failed to submit. As a result, OIG said the risk scores for the 200 sampled emrollees should be based on 979 HCCS (860 validated HCCs plus 54 other HCCS plus 65 additional HCCs) and resulted in the $551K overpayment.
In addition to the refund, OIG recommends EmblemHealth ensure that its policies and procedures are designed and implemented to prevent, deduct, and correct noncompliance with federal requirements for diagnosis codes used to calculate risk-adjustment payments. The insurer disagreed with the initial findings and recommendations, as well as the audit methodology and submitted additional information to validate specific HCCs. As a result of the information, CMS revised the overpayment amount to reflect the current $551,917 and revised wording in its second recommendation.
Medicare enrollees will see cost savings on 54 prescription drugs
Some Medicare enrollees will pay less for 54 drugs available through Medicare Part B, according to the U.S. Department of Health and Human Services (HHS).
The drugs will have a lowered Part B coinsurance rate from October 1 to December 31 because drug companies raised prices for each of these 54 drugs faster than the rate of inflation. HHS said that over 822,000 people with Medicare use these drugs annually to treat conditions such as cancer, osteoporosis, and pneumonia.
Because of the Inflation Reduction Act, which established the Medicare Prescription Drug Inflation Rebate Program, some people with Medicare who use these drugs in the last quarter of 2024 may save between $1 and $3,854 per day. For example, someone taking a drug called Kymriah, which treats cancer, could save as much as $3,000.
For more information, read the fact sheet.
VBID Model participation includes 62 participating Medicare Advantage organizations
The Centers for Medicare & Medicaid Services (CMS) recently announced the calendar year 2025 participants in the Medicare Advantage Value-Based Insurance Design (VBID) Model.
As part of the model, Medicare Advantage plans offer additional supplemental benefits and/or reduced cost sharing (in some cases to zero). Plans participating in the VBID Model may also use reward and incentive programs. For 2025, the model has 62 participating Medicare Advantage organizations testing the models in 48 states, the District of Columbia, and Puerto Rico through 967 plan benefit packages.
All participating organizations prepared health equity plans on how they will address potential inequities and disparities, and/or enrollee experience of care as it relates to their participation in the VBID model. In 2025, the model introduces requirements to offer benefits that address enrollees’ health-related social needs (HRSNs), as well as the ability for participating organizations to target supplemental benefits to enrollees living in the most underserved area deprivation index areas.
For CY 2025, participants in the model must offer a minimum of two supplemental benefits to address priority HRSNs from among the categories of food and nutrition, transportation, and housing and living environment. They may also target supplemental benefits to enrollees living in the most underserved areas to address HRSNs through evidence-based benefits tailored to community-identified needs.