Humana Rebounds as 2027 Medicare Advantage Ratings Decline

Humana significantly improved its Medicare Advantage quality ratings for 2027, while Alignment Healthcare suffered a major setback as federal rating changes reduced the number of members enrolled in highly rated plans. The results, released by the Centers for Medicare and Medicaid Services (CMS) on Thursday, show that Humana increased its share of members in plans rated at least four stars from 41% in 2026 to 93% in 2027.

The recovery marks a turnaround for Humana, the second-largest Medicare Advantage insurer, after its performance deteriorated sharply over the previous two years. According to Healthcare Dive's analysis of CMS data, the company's share of members in plans rated at least four stars fell from 94% in 2024 to 25% in 2025 and 20% in 2026.

TD Cowen analyst Ryan Langston estimated that Humana's improved ratings could generate at least $3 billion in additional revenue in 2028, when payments reflect the 2027 ratings. Humana shares rose nearly 13% in after-hours trading Thursday following the announcement.

Humana had previously promised investors that its ratings would be "meaningfully higher" in 2027.

J.P. Morgan analyst Lisa Gill described the recovery as a "clear win for a company that has been working toward this outcome for several years," in a note discussing the results.

Alignment Healthcare faced the opposite outcome after its largest contract fell below the four-star threshold for 2027. The California-based insurer covers approximately 280,000 members across five states, and the affected contract accounts for about three-quarters of its total membership.

According to Healthcare Dive's analysis, only 25% of Alignment's members will be enrolled in plans rated at least four stars in 2027, compared with 98% in 2026. Langston estimated that the company could forgo more than $170 million in revenue in 2028 based on its current membership. Alignment shares fell more than 20% following the announcement.

Alignment challenged the accuracy of the ratings and raised concerns about the CMS methodology. The company also indicated that it could pursue legal action over how the agency calculates star ratings.

Alignment President and health plan head Dawn Maroney said the insurer would challenge the disputed measures and methodology.

"We intend to pursue all available administrative remedies and to litigate the measures and methodologies we believe warrant review," Dawn Maroney, Alignment's president and head of its health plan, said in a statement.

Alignment did not disclose the expected financial impact in a securities filing.

Across the 10 largest Medicare Advantage insurers by membership, Humana, Blue Cross Blue Shield of Michigan and Devoted Health increased the proportion of members in plans rated four stars or higher. UnitedHealth, CVS, Elevance, Centene and Health Care Service Corporation saw declines as some contracts fell below the threshold.

Gill said the declines at UnitedHealth and CVS appeared manageable because both companies retained comparatively high enrollment in plans rated at least four stars.

The overall results reflected tighter federal quality-rating standards. For 2027, the CMS revised its methodology by introducing new measures, changing the weighting of existing measures and raising many performance thresholds. These adjustments made it more difficult for insurers to achieve higher ratings.

CMS data showed that approximately 37% of Medicare Advantage plans offering drug coverage received at least four stars for 2027, down from 44% in 2026. The enrollment-weighted average rating declined to 3.99 from 4.01, while the number of contracts receiving the highest five-star rating dropped to 15 from 22.

Among the organizations with five-star contracts were UnitedHealth, with three contracts, Kaiser Permanente, with one, and Clover Health, with one. Clover's separate contract received a 4.5-star rating for 2027.

Clover had sued the CMS late last year after its ratings fell. A judge's finding that the methodology was illegal led the agency to recalculate the 2026 ratings, giving some insurers a higher starting point for subsequent comparisons.

Clover's Medicare Advantage CEO Jamie Reynoso said the latest ratings reflected the company's efforts to maintain its benefits and provider network.

"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," Jamie Reynoso, Clover's Medicare Advantage CEO, said in a Thursday press release.