Quality ratings hit to key Medicare plan shakes Humana stock
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[October 03, 2024]
The Associated Press
Shares of Humana tumbled Wednesday after the health insurer said a
Medicare Advantage quality rating drop will hurt future bonus payments
the company receives.
The insurer said the share of its customers currently enrolled in plans
rated four stars or higher for 2025 is down to 25% from 94% this year.
Humana said the rating on a large, national insurance plan that contains
45% of Humana’s enrollment fell a point to 3.5 points.
That ratings drop could equate to a $1.9 billion revenue hit in 2026
before Humana does anything to offset the blow, Leerink Partners analyst
Whit Mayo said in a research note.
Medicare Advantage plans are privately run versions of the federal
government’s Medicare program mostly for people age 65 and older. An
annual enrollment window for 2025 coverage starts Oct. 15. Shoppers will
have until Dec. 7 to settle on coverage for next year.
BTIG analyst David Larsen said in a separate note that Humana's ratings
were disappointing given that Medicare Advantage plans already are
dealing with challenges like higher claims cost and more inpatient
hospital visits.
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A Humana logo is seen in a lake on the Palmer Private Course at PGA
West during the first round of the Humana Challenge PGA golf
tournament in La Quinta, Calif., Jan. 17, 2013. (AP Photo/Ben
Margot, File)
Humana Inc. said in a regulatory
filing that it is talking to federal officials about the reduction.
The company said it also is focused on improving its performance to
regain its star rating.
Humana, one of the biggest providers of Medicare Advantage coverage,
said the ratings drop will not affect its results or outlook for
this year and next. The company said it would explore all options to
mitigate the revenue hit it expects to take in 2026.
The Louisville, Kentucky, company’s stock ended Wednesday down
almost 12% in Wednesday afternoon trading. It has lost 46% so far
this year.
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