When Humana lost its lawsuit against the Centers for Medicare & Medicaid Services (CMS), it wasn’t just a legal defeat—it was a loud warning to insurers, providers, and healthcare organizations across the country. The ruling, which upheld CMS’s decision to lower Humana’s Medicare Advantage star ratings, is expected to cause ripple effects that reach all the way down to individual clinics and the patients they serve. But to truly understand what this means, we need to unpack not just the lawsuit, but the structure of Medicare Advantage itself and the sweeping changes CMS is making in 2025.

Let’s walk through what happened, why it matters, and what every provider and organization should be doing right now.

Understanding the Lawsuit: Humana vs. CMS

Humana’s legal battle centered on CMS’s decision to downgrade the quality scores (or “Star Ratings”) of its Medicare Advantage plans. These ratings are important because they determine how much bonus money an insurance company receives from CMS. Humana argued that the downgrade was unfair and based on changes to the scoring rules that were applied retroactively. They believed the rules weren’t transparent, were implemented inconsistently, and didn’t give insurers a fair chance to adjust.

CMS disagreed, saying that the scoring system followed clearly defined rules and that plans were rated fairly based on performance and patient feedback. The federal court ultimately sided with CMS, dismissing Humana’s claims. This came after Humana already lost an administrative appeal on the same issue, and while they continue to pursue another lawsuit on similar grounds, this initial defeat is financially and reputationally significant (Reuters, Bloomberg Law).

The ratings drop means that Humana will lose out on hundreds of millions in bonus payments from CMS in 2026. That kind of loss forces big companies to make big changes—which often trickle down to those who deliver and receive care.

What Led to the Downgrade of Humana’s Ratings?

The core of Humana’s dispute with CMS lies in the agency’s decision to lower the Star Ratings of its Medicare Advantage plans. CMS uses a 1-to-5-star system to measure the quality of Medicare Advantage plans across several categories, including patient care, customer service, and health outcomes. A higher rating generally means better care and more funding. Plans that score 4 stars or higher are eligible for Quality Bonus Payments, which significantly impact insurer revenue.

So, what did CMS say went wrong?

According to CMS, Humana underperformed in several critical areas. These included lower-than-expected results in preventive care services, such as cancer screenings and vaccinations, as well as lower scores in how patients rated their experiences with Humana’s customer service and care coordination. For instance, if fewer patients are getting recommended mammograms or colorectal cancer screenings on time, that’s considered a red flag. These types of preventive services are used by CMS to assess whether a plan is actively managing the health of its members—not just reacting to illness when it arises.

Humana was also cited for inconsistencies in chronic disease management. Conditions like diabetes and high blood pressure require close monitoring and regular follow-up visits. CMS expects plans to ensure that patients with chronic conditions are staying on top of lab work, medications, and check-ins with their care team. If a significant portion of members are not receiving this level of care, the plan’s quality scores drop.

Another key metric was medication adherence—that is, how consistently patients fill and take their prescriptions. This is especially important for managing heart disease, diabetes, and cholesterol levels. A decline in medication adherence across a patient population suggests a breakdown in care management or patient support systems.

Lastly, patient satisfaction scores played a major role in the downgrade. Every year, CMS surveys beneficiaries about their experiences with their plan. These surveys cover everything from how easy it was to get needed care to how respectfully providers communicated. Humana’s lower satisfaction ratings dragged down its overall Star performance.

CMS reviewed all of these metrics and determined that Humana’s performance didn’t meet the standards needed to maintain its previous high rating. The agency applied its existing rules and methodologies to recalculate scores, leading to the downgrade that ultimately prompted Humana’s lawsuit (CMS MA Star Ratings Overview).

What Are Medicare Advantage Plans—and How Do They Work?

Medicare Advantage (MA), also called Medicare Part C, is an alternative to traditional Medicare. Instead of the government paying doctors directly for services, CMS gives private insurance companies like Humana a fixed monthly payment for each patient they cover. This payment is based on the patient’s health status and the plan’s quality rating (Medicare.gov).

In this model, insurance companies—and by extension, the providers they contract with—take on financial responsibility for managing each patient’s care. If the patient stays healthy and costs are low, the plan keeps more of the money. But if the patient requires frequent hospitalizations or expensive treatments, the plan must absorb those extra costs. This structure is meant to promote value over volume by rewarding better care and cost efficiency.

Payments to insurers like Humana are risk-adjusted using a system called Medicare Risk Adjustment (MRA). This considers the severity of a patient’s health conditions and helps ensure plans aren’t penalized for enrolling sicker patients. Accurate coding and documentation are critical here because they influence how much CMS pays the insurer. If a diagnosis isn’t well documented, CMS can demand money back during an audit.

Quality is also a key part of how plans get paid. CMS uses several frameworks—like MACRA (Medicare Access and CHIP Reauthorization Act), HEDIS (Healthcare Effectiveness Data and Information Set), and the Medicare Star Ratings—to measure performance and incentivize better outcomes. The higher the quality, the better the payment (CMS Medicare Advantage Fact Sheet).

Why Flu Shots and Follow-Ups Matter

To most people, tracking how many patients get a flu shot might seem like a minor detail. But in the Medicare Advantage world, it’s a sign of whether a provider is taking preventive care seriously. The goal is not just to treat people when they’re sick, but to prevent illness before it starts.

For example, flu shots protect older adults—who are more vulnerable to complications—from severe illness, hospitalization, and even death. If a healthcare provider ensures that a high percentage of their patients get the flu shot each year, this shows they are proactively managing care, which CMS considers high quality (KFF Brief on Preventive Services).

Other examples include managing chronic conditions like diabetes or high blood pressure. If a patient with diabetes has regular A1c tests, takes medications as prescribed, and sees the doctor for follow-ups, they’re less likely to suffer from serious complications. When many patients under one provider show these types of results, the system sees that provider as delivering effective, coordinated care.

That’s what the Star Rating system is designed to reward—better outcomes, higher patient satisfaction, and cost-effective services.

How the Lawsuit Affects Providers

Now that CMS is withholding bonus payments from Humana, the company will likely look for ways to reduce costs elsewhere. One common move is to lower reimbursement rates to healthcare providers. That means physicians, clinics, and hospitals who work with Humana might be paid less for seeing Medicare Advantage patients. These cuts can be particularly hard on small practices or providers in rural and underserved areas who already operate on tight budgets (Modern Healthcare).

Another expected consequence is the tightening of utilization management rules. This means more red tape—such as prior authorizations for basic services, additional steps to get tests approved, or restrictions on how often a patient can see a specialist. These delays not only make patient care more complicated but also burden office staff with extra paperwork.

To top it off, providers will likely feel increased pressure to hit quality performance targets. These include things like ensuring a certain percentage of patients receive cancer screenings, managing chronic illnesses effectively, or scoring high in patient satisfaction surveys. While these are good goals, they can be hard to meet—especially if patients miss appointments, decline services, or face socioeconomic barriers. Yet providers are still held accountable for these outcomes.

How the Lawsuit Affects Patients

The effects of Humana’s loss won’t stop with the providers. Patients in Humana Medicare Advantage plans could see some changes too.

One area at risk is the extra benefits many MA plans offer, such as vision and dental coverage, transportation to doctor appointments, or meal delivery after hospital stays. These aren’t guaranteed benefits—they’re offered when the insurance plan can afford them. If Humana’s revenue shrinks, they may cut back on these services.

Patients could also face higher out-of-pocket costs. That might look like larger copays at the doctor’s office, increased deductibles, or higher prices for prescription drugs. For seniors and people living on fixed incomes, even a small increase can be the difference between staying healthy and putting off needed care.

Perhaps the most frustrating impact for patients will be network disruptions. Providers are not required to accept Humana contracts. If the insurer lowers payments or tightens administrative requirements too much, some doctors may simply walk away. When this happens, patients are forced to make hard choices: find a new doctor, change insurance plans (which may not be possible outside of open enrollment), or pay out-of-pocket to continue seeing the same provider.

And with a national shortage of physicians and long waitlists, switching providers isn’t as simple as picking a new name off a list. Patients in rural or underserved areas might find there’s no one new to go to at all (Association of American Medical Colleges – Physician Shortage Report).

What CMS Is Doing in 2025—and Why It Matters

Taino Consultants recently published a detailed breakdown of CMS’s new enforcement strategy for Medicare Advantage plans. It’s clear that the agency is no longer just relying on spot-checks or random reviews—it’s going all in.

Starting in 2025, CMS will audit every Medicare Advantage plan every year. No plan is exempt. To make this possible, they’re increasing their audit staff from just 40 people to over 2,000 trained medical coders by September 2025.

The number of records pulled in each audit is increasing, too. CMS will now review between 35 and 200 medical records per plan, depending on the size of the organization.

Perhaps the most dramatic shift is the use of artificial intelligence. CMS is deploying AI tools to scan patient records for “unsupported diagnoses”—cases where a provider listed a diagnosis like congestive heart failure or cancer, but didn’t provide enough medical documentation to prove it. These codes lead to higher payments, and CMS is using AI to catch when they’re misused.

For anyone involved in billing, coding, or compliance, this is a game-changer.

👉 Read full breakdown: Taino Consultants – Ongoing Federal Audit & Enforcement Trends

What Providers and Organizations Should Do Now

For individual providers, the most important step is to document clearly and accurately. If you diagnose a patient with a chronic condition, the supporting evidence must be in the chart. This includes test results, physical exam findings, treatment plans, and ongoing monitoring. If it’s not written down, CMS considers it didn’t happen—and may demand the money back.

Providers also need to familiarize themselves with the specific metrics that impact their contracts with Medicare Advantage plans. These can include HEDIS measures like cancer screenings, eye exams for diabetics, and patient follow-ups after hospital discharge. Knowing what’s being measured—and improving patient outreach—can go a long way.

Organizations must think bigger. Compliance can no longer be an afterthought. It must be built into daily operations. This includes investing in real-time dashboards that monitor quality performance, offering training programs that show staff how to meet metric goals, and conducting internal audits to find weaknesses before CMS does.

Most importantly, organizations should consider partnering with experts who specialize in federal healthcare compliance. Groups like Taino Consultants and EPICompliance help providers build robust systems that survive audits and reduce risk.

Final Thoughts

Humana’s lawsuit loss is just the beginning. It’s a case study in what happens when quality metrics dip, documentation doesn’t meet the mark, and federal oversight tightens the belt. Whether you’re a provider, administrator, or patient, the message is clear: compliance and care quality are no longer optional—they’re required.

If you’re not ready for what CMS is rolling out in 2025, now is the time to act. And if you don’t know where to begin, we’re here to help.

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