November 10, 2024

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Humana sues US health agencies

Humana sues US health agencies


Humana sues US health agencies | Insurance Business America















It points to potentially billions in lost revenue

Humana sues US health agencies

Life & Health

By

Humana Inc., one of the largest private Medicare Advantage insurance providers in the US, has filed a lawsuit against US health agencies in response to a recent cut in crucial Medicare quality ratings. The lawsuit is an attempt to reverse the decision which has already hurt its stock value and threatens a loss of billions of dollars in incoming revenue.

Humana filed the suit on October 18 in the Northern District of Texas federal court, presided over by Judge Reed O’Connor. The company claims that the US Medicare program acted in a “arbitrary and capricious” manner in calculating its metrics on the health plans offered by Humana.

The metrics, called star ratings, play a crucial role in determining bonus payments worth billions of dollars. The latest downgrade spells bad news for the 2026 earnings targets that Humana has set, and one analyst called it a “worst-case scenario” for the Louisville, Kentucky-based insurer.

Humana attempted to settle the case directly with officials before filing the lawsuit. The company requested transparency regarding the policies, practices, and calculations that go into making up the rating determination by the authorities.

In addition, the company also requested rectification of perceived errors as well. The matter was not resolved, leading the company to take legal action.

Such legal ramifications are not unprecedented in the health insurance industry. For instance, Elevance Health Inc. has already won court cases over low scores for some of its Medicare quality performance. UnitedHealth Group Inc., the largest seller of private Medicare Advantage plans, has a similar pending case.

The case may have broader implications for the health sector too, according to a Bloomberg report. It may now alter the way the Medicare quality rating is calculated and will be used going forward. The competitive balance of the insurance providers that offer Medicare Advantage could also be influenced.

Representatives from the US Centres for Medicare and Medicaid Services have not yet commented on the lawsuit.

The legal battle is taking place against the backdrop of news reports that Cigna has begun merger talks with Humana.

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