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Recalculation Ahead: Implications of UnitedHealth's Win Against CMS
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A federal judge in Texas recently ordered the Centers for Medicare and Medicaid Services (CMS) to recalculate UnitedHealth Group Incorporated’s (UNH - Free Report) Medicare Star Ratings for the 2025 plan year. Jeremy Kernodle of the U.S. District Court for the Eastern District of Texas ruled in favor of UnitedHealthcare in its lawsuit against the CMS.
The judge determined that CMS violated the Administrative Procedure Act of 1946 by incorrectly marking a test call to UnitedHealthcare's call center as unsuccessful, unfairly impacting the company's Medicare Advantage star ratings for 2025. He ordered the agency to recalculate without considering the disputed test call and immediately publish the revised ratings in the Medicare Plan Finder.
However, the judge did not agree with UnitedHealthcare's argument that CMS applied a different standard to it than Elevance Health, Inc. (ELV - Free Report) in reviewing its call center. Despite this, the ruling is promising for other Medicare Advantage insurers as well, with pending lawsuits over star ratings.
Why Is it so Important for Insurers?
A single unsuccessful call can prevent a plan from achieving a five-star rating, potentially costing the insurer millions. The UnitedHealthcare ruling may set a precedent for how star ratings are evaluated, particularly regarding the use of private contractors in assessing call center performance. The CMS already started working to reduce the weight of call center metrics in determining final Medicare Advantage star ratings.
Since star ratings influence a plan’s ability to attract new members and secure funding, UnitedHealthcare is now likely to gain significantly more in quality bonus payments for 2026 following the recalculation. UnitedHealth currently has a Zacks Rank #3 (Hold).
UNH’s success marks the third recent defeat for CMS in star ratings lawsuits, raising hopes for Humana Inc. (HUM - Free Report) and Centene Corporation (CNC - Free Report) as they challenge their own ratings.
Humana, heavily reliant on Medicare Advantage, saw its 2025 star ratings drop, mainly due to unexpectedly high cut points for individual measures, which the company noted were significantly above the historical trends.
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Recalculation Ahead: Implications of UnitedHealth's Win Against CMS
A federal judge in Texas recently ordered the Centers for Medicare and Medicaid Services (CMS) to recalculate UnitedHealth Group Incorporated’s (UNH - Free Report) Medicare Star Ratings for the 2025 plan year. Jeremy Kernodle of the U.S. District Court for the Eastern District of Texas ruled in favor of UnitedHealthcare in its lawsuit against the CMS.
The judge determined that CMS violated the Administrative Procedure Act of 1946 by incorrectly marking a test call to UnitedHealthcare's call center as unsuccessful, unfairly impacting the company's Medicare Advantage star ratings for 2025. He ordered the agency to recalculate without considering the disputed test call and immediately publish the revised ratings in the Medicare Plan Finder.
However, the judge did not agree with UnitedHealthcare's argument that CMS applied a different standard to it than Elevance Health, Inc. (ELV - Free Report) in reviewing its call center. Despite this, the ruling is promising for other Medicare Advantage insurers as well, with pending lawsuits over star ratings.
Why Is it so Important for Insurers?
A single unsuccessful call can prevent a plan from achieving a five-star rating, potentially costing the insurer millions. The UnitedHealthcare ruling may set a precedent for how star ratings are evaluated, particularly regarding the use of private contractors in assessing call center performance. The CMS already started working to reduce the weight of call center metrics in determining final Medicare Advantage star ratings.
Since star ratings influence a plan’s ability to attract new members and secure funding, UnitedHealthcare is now likely to gain significantly more in quality bonus payments for 2026 following the recalculation. UnitedHealth currently has a Zacks Rank #3 (Hold).
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
UNH’s success marks the third recent defeat for CMS in star ratings lawsuits, raising hopes for Humana Inc. (HUM - Free Report) and Centene Corporation (CNC - Free Report) as they challenge their own ratings.
Humana, heavily reliant on Medicare Advantage, saw its 2025 star ratings drop, mainly due to unexpectedly high cut points for individual measures, which the company noted were significantly above the historical trends.