In 2027, Medicare Advantage star ratings have declined, yet Humana stands out with notable improvements. The insurer, which faced a significant ratings drop two years prior, saw its members in 4+ star plans surge from 41% in 2026 to 93% in 2027, as revealed by a Healthcare Dive analysis of CMS-released data.
This boost is particularly significant for Humana, the second-largest insurer in Medicare Advantage, as it works to recover from unexpectedly high medical spending that has pressured its profits. The company’s stars performance had previously declined, with the percentage of members in plans rated at least 4 stars dropping from 94% in 2024 to 25% in 2025, and again to 20% in 2026.
Humana’s Turnaround
Humana had promised investors that its stars would be “meaningfully higher” in 2027, and the company has delivered on that promise. By getting its largest contract back above the 4-star cutoff, Humana may net an additional $3 billion or more in revenue in 2028, according to TD Cowen analyst Ryan Langston. This news sent Humana’s stock soaring almost 13% in postmarket trade on Thursday.
J.P. Morgan analyst Lisa Gill described the achievement as a “clear win for a company that has been working toward this outcome for several years.” The turnaround is a significant development for Humana, which has been working to resuscitate its profits and improve its stars performance.
In contrast, Alignment Healthcare, which covers around 280,000 members in five states, experienced a significant setback when its largest contract slipped below 4 stars for 2027. This contract covers approximately three-fourths of Alignment’s total membership, and the company will only have 25% of members in plans rated above the 4-star threshold next year, down from 98% currently.
Alignment’s Setback
Alignment argued that the rating does not accurately reflect its performance and pointed to frequent lawsuits over the CMS’ calculation of star ratings. The company’s president and head of its health plan, Dawn Maroney, stated that Alignment intends to “pursue all available administrative remedies and to litigate the measures and methodologies we believe warrant review.”
The expected earnings impact of this setback was not disclosed by Alignment, but based on its current membership, the company could lose out on more than $170 million in revenue in 2028, according to Langston. Shares in Alignment sank more than 20% on the news, reflecting the significant impact of the star rating decline on the company’s prospects.
Other major Medicare Advantage insurers experienced less dramatic fluctuations in their star ratings. Among the 10 largest insurers by membership, Humana, Blue Cross Blue Shield of Michigan, and Devoted Health will have more members in plans rated 4 stars or higher next year, while 5 others, including UnitedHealth and CVS, will have fewer.
The CMS rates plans on up to 43 measures, which include thresholds to determine whether a plan gets a 1, 2, 3, 4, or 5 rating. The agency tweaked its methodology for 2027, adding new measures, reweighting existing measures, and boosting many of the thresholds for achieving quality scores. Experts had predicted that these changes would make it harder for insurers to achieve higher stars, and the latest ratings reflect this prediction.
About 37% of Medicare Advantage plans with drug coverage earned 4 stars or above for 2027, down from 44% in 2026, according to the CMS. The average star rating also fell to 3.99, down from 4.01 the year prior. Only 15 contracts achieved the highest 5-star rating in 2027, down from 22 in 2026.
With Medicare open enrollment set to begin on October 15, seniors will need to review their options carefully.
Impact on Seniors
Clover Health, a physician enablement and insurance company, achieved a high rating, with one of its contracts receiving a 5-star rating and another a 4.5-star rating. Jamie Reynoso, Clover’s MA CEO, said the company’s teams have worked hard over the last several years, and they are excited about what this year’s Star rating means for their ability to deliver benefits and affordability to their members.
