Humana sharply improved its Medicare Advantage star ratings for 2027 after the Centers for Medicare and Medicaid Services released new quality data.
Alignment Healthcare suffered a major decline affecting most of its members, according to a Healthcare Dive analysis of the CMS data.
The share of Humana members enrolled in plans rated 4 stars or higher rose to 93% in 2027 from 41% in 2026.
The insurer previously fell to 20% in 2026 from 94% in 2024.
Humana had promised investors that its star results would be "meaningfully higher" in 2027.
The company, the second-largest Medicare Advantage insurer, regained a 4-star rating for its largest contract.
That change could generate $3 billion or more in additional revenue in 2028, according to TD Cowen analyst Ryan Langston.
Humana's improved rating followed years of weaker performance and comes as the insurer works to address profit pressure from higher-than-expected medical spending.
Its stock rose nearly 13% in after-hours trading following the ratings announcement.
J. P.
Morgan analyst Lisa Gill described the result as a significant achievement.
"This is a clear win for a company that has been working toward this outcome for several years," wrote Lisa Gill in a note on the results.
Alignment Healthcare Faces Steep Decline
Alignment Healthcare faced the opposite outcome after its largest contract dropped below the 4-star threshold for 2027.
According to Healthcare Dive, only 25% of Alignment members will be in plans above that threshold next year, compared with 98% currently.
Alignment said the rating did not accurately represent its performance and questioned CMS methods for calculating star scores.
The insurer's president and head of its health plan, Dawn Maroney, addressed the company's response.
"We intend to pursue all available administrative remedies and to litigate the measures and methodologies we believe warrant review," said Dawn Maroney.
Based on current membership, Alignment could lose more than $170 million in revenue in 2028, according to Langston's analysis.
The company's shares fell more than 20% after the ratings were released.
Among the 10 largest Medicare Advantage insurers by membership, Humana, Blue Cross Blue Shield of Michigan and Devoted Health had more members in 4-star or higher plans for 2027.
UnitedHealth, CVS, Elevance, Centene and Health Care Service Corporation had fewer.
CMS changed its star ratings methodology for 2027 by adding measures, adjusting weights and raising several performance thresholds.
According to CMS data, about 37% of Medicare Advantage plans with drug coverage received 4 stars or higher, down from 44% in 2026.
The average Medicare Advantage star rating declined to 3.99 in 2027 from 4.01 the previous year.
Fifteen contracts achieved a 5-star rating, compared with 22 contracts in 2026.
Clover Health was among the insurers receiving a top rating contract after previously challenging CMS calculations.
Its Medicare Advantage CEO Jamie Reynoso discussed the company's results.
"Our teams have worked incredibly hard over the last several years, and we're excited about what this year's Star rating means for our ability to keep delivering the benefits, affordability, and wide choice of providers that our members count on and trust," said Jamie Reynoso.
CMS star ratings combine scores from up to 43 quality measures and determine bonus payments and other financial benefits tied to Medicare Advantage plans.
