US health agency releases 2025 quality ratings for Medicare plans
Adds CVS results from paragraph 7 onwards
By Amina Niasse
NEW YORK, Oct 10 (Reuters) -The U.S. government announced quality ratings for 2025 Medicare health and prescription drug plans on Thursday, the first indication of which large health insurers, including CVS Health CVS.N, UnitedHealth Group UNH.N and Humana HUM.N, will get bonus payments in 2026.
Sixty-two percent of people currently enrolled in Medicare Advantage plans that cover prescription drugs are covered by plans rated four or more stars, the Medicare agency said in its release,down from 74% last year.
About 40% of plans being offered are four stars or higher, down from 42% in 2024.
The agency scores health plans between one to five stars, with five being the highest performing.
Low ratings can discourage older Americans from renewing their Medicare coverage with certain insurers and reduce plan enrollments, said Joanna Gajuk, a research analyst at Bank of America, in a note.
Research firm KFF said in September that the government was on track to pay out nearly $12 billion in star ratings-related bonuses to Medicare Advantage plans in 2024.
CVS RATINGS RISE
CVS said separately that 88% of its MA members are enrolled in plans that are rated 4 stars or higher, with more than two-thirds in a 4.5-star plan. It said that includes its health insurance unit Aetna's two largest national plans.
In 2024, 87% of members were enrolled in highly rated plans and 21% in 2023.
"This is just another demonstration and evidence that we are putting ourselves on a path to improve the performance of Aetna," CVS CEO Karen Lynch said in an interview.
CVS has been under pressure from investors including activist hedge fund Glenview after a year in which it missed several financial targets due to weakness in Aetna.The company is also grappling with increasedcosts associated with higher demand for medical care, and lower-than-expected reimbursements from the government.
Reuters reported earlier this month that CVS was consideringseparating its pharmacy and insurance business. Its shareshave fallen 15% so far this year to around $66.
Humana is "likely to track in line" with its estimates last week, which pointed to only a quarter of its members remaining enrolledin 2025 for its 4+ rating plans, compared with 94% in 2024, Oppenheimer analyst Michael Wiederhorn said in a note.
CVS is likely to gain members from Humana due to its lower ratings, Barclays analyst Andrew Mok wrote in a note.
Reporting by Amina Niasse in New York and Mariam E Sunny in Bengaluru; Editing by Caroline Humer, Bill Berkrot and Devika Syamnath
Latest News
Disclaimer: The XM Group entities provide execution-only service and access to our Online Trading Facility, permitting a person to view and/or use the content available on or via the website, is not intended to change or expand on this, nor does it change or expand on this. Such access and use are always subject to: (i) Terms and Conditions; (ii) Risk Warnings; and (iii) Full Disclaimer. Such content is therefore provided as no more than general information. Particularly, please be aware that the contents of our Online Trading Facility are neither a solicitation, nor an offer to enter any transactions on the financial markets. Trading on any financial market involves a significant level of risk to your capital.
All material published on our Online Trading Facility is intended for educational/informational purposes only, and does not contain – nor should it be considered as containing – financial, investment tax or trading advice and recommendations; or a record of our trading prices; or an offer of, or solicitation for, a transaction in any financial instruments; or unsolicited financial promotions to you.
Any third-party content, as well as content prepared by XM, such as: opinions, news, research, analyses, prices and other information or links to third-party sites contained on this website are provided on an “as-is” basis, as general market commentary, and do not constitute investment advice. To the extent that any content is construed as investment research, you must note and accept that the content was not intended to and has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such, it would be considered as marketing communication under the relevant laws and regulations. Please ensure that you have read and understood our Notification on Non-Independent Investment. Research and Risk Warning concerning the foregoing information, which can be accessed here.
