Lawsuit Reintroduction Details
Humana has officially reintroduced its legal challenge against the Centers for Medicare & Medicaid Services (CMS) regarding Medicare Advantage star ratings, marking a significant escalation in the ongoing dispute between major insurers and federal regulators. The healthcare giant filed its renewed lawsuit on July 21 in the U.S. District Court in Fort Worth, Texas, just three days after a federal judge dismissed the original case.
Initial Dismissal and Legal Procedural Requirements
U.S. District Judge Reed O’Connor dismissed Humana’s initial lawsuit on July 18 without prejudice, citing the company’s failure to exhaust all available administrative appeal options before pursuing federal court action. The judge’s ruling emphasized the importance of following proper procedural channels when challenging federal agency decisions, particularly in complex healthcare regulatory matters.
Administrative Appeal Process Completion
The renewed legal action comes after Humana successfully completed the mandatory administrative appeal process in April 2025. This procedural step was crucial for establishing the company’s legal standing to challenge CMS decisions in federal court. The completion of administrative appeals demonstrates Humana’s commitment to pursuing all available remedies to address what it views as fundamental flaws in the star ratings methodology.
Timeline of Legal Proceedings
The legal timeline began in October 2024 when Humana first filed its challenge, followed by the dismissal in July 2025, and the subsequent refiling just days later. This rapid succession of legal moves highlights the urgency Humana places on resolving these star ratings disputes, particularly given their significant financial implications.
Core Legal Arguments Against CMS
Secret Shopper Program Allegations
Humana’s lawsuit centers on several key allegations against CMS’s administration of the Medicare Advantage star ratings system. The company argues that CMS incorrectly conducted “secret shopper” calls designed to evaluate foreign language interpreter services. These calls are critical components of the customer service ratings that directly impact overall star ratings.
Methodology and Regulatory Compliance Issues
The insurer contends that CMS failed to follow its own established regulations when calculating star ratings, representing a significant procedural violation. Additionally, Humana alleges that CMS did not provide necessary data transparency, preventing the company from understanding why star rating cut points moved upward for 2025 ratings.
Data Transparency Concerns
The lack of adequate data provision by CMS has created significant challenges for Humana in understanding and potentially improving its performance metrics. This transparency issue affects not only Humana’s ability to contest ratings but also its capacity to implement targeted improvements in areas where ratings may have declined.
Financial Impact on Humana
Significant Rating Decline
Humana experienced a substantial drop in its Medicare Advantage star ratings from 2024 to 2025, creating immediate and long-term financial concerns. Star ratings directly influence Medicare Advantage bonus payments from CMS, with higher-rated plans receiving additional funding that can be reinvested in member benefits or retained as profit.
2026 Earnings Projections
The company has explicitly stated that these lower star ratings are expected to materially impact its 2026 earnings, indicating the substantial financial stakes involved in this legal challenge. The timing of this impact reflects the delayed nature of star ratings consequences, as current year ratings determine following year bonus payments and member enrollment patterns.
Industry-Wide Star Ratings Challenges
Multiple Insurer Legal Actions
Humana is not alone in challenging CMS star ratings, as several other major insurers have pursued similar legal remedies. This widespread legal activity suggests systemic concerns about CMS’s rating methodology and administration across the Medicare Advantage industry.
Mixed Court Outcomes
Legal outcomes have varied significantly across different insurers and jurisdictions. Courts have ruled favorably for UnitedHealthcare and Centene in their respective challenges, while denying relief to Florida Blue, Blue Cross Blue Shield of Louisiana, and other insurers. These mixed results highlight the complexity of star ratings litigation and the case-specific nature of successful challenges.
Company’s Strategic Response
CEO’s Cautious Planning Approach
In June 2025, Humana CEO Jim Rechtin informed investors that the company is developing its Medicare Advantage strategy under the assumption that it will not prevail in its star ratings challenge. This conservative approach demonstrates responsible corporate planning while maintaining legal pressure on CMS to address the company’s concerns.
Risk Management Strategy
By planning for an unfavorable legal outcome, Humana is positioning itself to adapt its business model and operational strategies regardless of court decisions. This approach helps minimize potential disruption to business operations while maximizing the potential benefits if the legal challenge succeeds.
What This Means for Medicare Beneficiaries
The outcome of Humana’s star ratings challenge could have broader implications for Medicare Advantage beneficiaries nationwide. Star ratings influence plan availability, benefit structures, and premium costs, making the resolution of these disputes important for current and future Medicare Advantage members. Additionally, the precedent set by these cases may influence how CMS administers star ratings for all Medicare Advantage plans going forward.
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