- About 71% of Medicare Advantage prescription drug plan members are enrolled in contracts receiving at least four stars for 2027, according to CMS.
- Humana’s four-star-or-higher enrollment share reached approximately 95%, with Oppenheimer estimating that improved ratings could generate an additional $3.6 bn in revenue.
- UnitedHealth, CVS Health, Elevance and Centene recorded declines in average ratings, while 2027 star ratings will determine Medicare Advantage quality bonus payments for 2028.
Humana recorded a substantial improvement in its Medicare Advantage quality ratings for 2027, potentially increasing its government bonus payments, while several major US health insurers saw their scores decline, according to federal data and analysis from Oppenheimer.
The Centers for Medicare & Medicaid Services (CMS) said approximately 71% of current Medicare Advantage prescription drug plan enrollees belong to contracts that received quality ratings of four stars or higher for 2027.
CMS, an agency within the US Department of Health and Human Services, evaluates Medicare Advantage and prescription drug plans on a five-star scale, with five stars representing the highest performance. The ratings influence government bonus payments worth billions of dollars and can affect insurers’ ability to attract new members.
Humana emerged with stronger results than its major competitors. Approximately 95% of its members were enrolled in plans rated at least four stars, representing a 53% improvement from the previous year, according to calculations by investment bank Oppenheimer.
Oppenheimer analysts estimated that the improvement could contribute an additional $3.6 bn in revenue for Humana and provide greater visibility into the insurer’s future earnings.
Other major Medicare Advantage providers experienced weaker ratings. Average scores for UnitedHealth Group and CVS Health declined 15% from the previous year, according to Wiederhorn. Elevance Health recorded a 10% decrease, while Centene’s ratings fell 9%.
The results prompted divergent reactions in extended stock market trading. Humana shares rose approximately 14%, compared with a 0.5% decline for UnitedHealth and a 4% drop for CVS Health.
CMS also issued a low-performance warning for a California-based prescription drug plan operated by Aetna, the insurance subsidiary of CVS Health.
Aetna President Steve Nelson said the company’s quality ratings reflected improvements in clinical services and health outcomes among its members.
UnitedHealth Group, one of the largest Medicare Advantage providers in the US, said its ratings were consistent with expectations.
Medicare Advantage plans are privately administered, government-backed health insurance programs serving Americans aged 65 and older and eligible people with disabilities. Their quality ratings influence both enrollment and federal payments to participating insurers.
According to health policy research organization KFF, CMS is expected to distribute more than $13 bn in Medicare Advantage quality bonus payments in 2026.
For 2027, approximately 37% of Medicare Advantage prescription drug contracts received overall ratings of four stars or higher, CMS reported. This contract-level figure differs from the 71% enrollment measure, which reflects the share of beneficiaries currently covered by higher-rated contracts.
The star ratings assess several aspects of plan performance, including customer satisfaction, access to medical services and management of chronic health conditions. Plans earning five stars receive an additional enrollment advantage because eligible beneficiaries can join them throughout the year rather than being restricted to standard enrollment periods.
The 2027 ratings will be available to beneficiaries during Medicare’s annual open enrollment period, scheduled for October 15 through December 7. They will also determine the quality bonus payments insurers receive in 2028.
UnitedHealthcare and Aetna could offset reductions in Medicare Advantage bonus payments through changes in membership and their private health insurance operations.
Humana did not immediately respond to a Reuters request for comment on the ratings. The financial effects of the new scores will depend partly on how enrollment develops, with higher-rated contracts eligible for bonus payments and five-star plans benefiting from additional opportunities to attract members.
How does Medicare Advantage work?
There are many different types of Medicare Advantage plans, and each functions in a unique way. These plans include:
- Health maintenance organizations (HMOs): Plans that generally limit your coverage and benefits to a defined network of health care providers
- Preferred provider organizations (PPOs): Plans that offer a broader selection of in- and out-of-network providers, though your costs are lower in-network
- Special needs plans (SNPs): Can be HMOs or PPOs specifically intended for people who meet narrow eligibility criteria
- Private fee-for-service (PFFS) plans: Plans that pre-negotiate how much they will pay your doctors and other providers for care you receive at Medicare-approved facilities
- Medicare Savings Accounts (MSAs): High-deductible plans that include a special vehicle for putting pre-tax money aside to pay for your out-of-pocket costs
Not all types of Medicare Advantage plans are available in all areas or to all Medicare enrollees. It’s also important to note that if you have Medicare Advantage, you can’t also have a Medigap (supplemental insurance) policy.
