Humana's stock price rose by about 14% before the market opened on Friday. The most recent quality rating for Medicare Advantage indicated a significant improvement in the performance of this insurance company, whereas the results for Aetna under its competitor CVS Health were weaker.
The backdrop for this increase is that Humana has confirmed that 95% of its Medicare Advantage members will be included in the plan to be rated as four-star or above in 2027, whereas in the previous year, this proportion was around 20%.
According to the official ratings from the Centers for Medicare & Medicaid Services (CMS), these changes will affect the quality incentive payments that insurance companies will receive in 2028.
Analysts estimate that this transformation could bring an additional potential income of about $3.6 billion to Humana, which represents a considerable financial benefit.
The Medicare upgrade of Humana reversed the previous losses.
Humana The rating of the largest Medicare Advantage contract, H5216, has been upgraded from 3.5 stars to four stars, which may restore its eligibility to receive government quality bonuses.
This contract covers approximately 2.4 million members, making this upgrade particularly important.
Humana also indicates that currently, 42% of its Medicare Advantage members have joined plans with a rating of at least 4.5 stars.
This improvement comes after years of financial pressure related to ratings. Previously, these pressures had weakened profitability and forced insurance companies to reconsider their coverage strategies.
Recent changes to the Medicare Advantage rules have prompted Humana, CVS, and UnitedHealth to reduce their geographical coverage or adjust the availability of their services.
CVS and UnitedHealth face rating pressure
The improvements of Humana stand in contrast to the more difficult results of its competitors.
CVS Health indicates that by 2027, more than 69% of Medicare Advantage members will join the four-star or higher plan, which is lower than the over 81% in 2026.
Although Aetna emphasized its clinical manifestations in an official statement, this decline has raised concerns in the market regarding future quality bonuses.
CVS's stock price fell by about 2%, and UnitedHealth also came under pressure after the release of its rating results.
This differentiation is noteworthy, as the industry has recently benefited from an increase in payments related to Medicare. This change initially boosted large health insurance stocks.
