Humana 8-K Report, Regulation FD Disclosure (Oct 2, 2024)

Humana Inc. filed this Form 8-K under Item 7.01 (Regulation FD Disclosure) to disclose preliminary 2025 Medicare Advantage (MA) Star Ratings data from the Centers for Medicare and Medicaid Services (CMS), which became available in CMS Plan Finder as of October 1, 2024.

Based on that preliminary data, approximately 1.6 million members, or 25%^a of Humana's membership, are currently enrolled in plans rated 4 stars and above for 2025, down from 94% in 2024. The decline was driven primarily by contract H5216, which fell to a 3.5-star rating from 4.5 stars in 2024. H5216 contains approximately 45% of Humana's MA membership, including more than 90% of its employer group waiver plan (Group MA) membership.

The Company expects the decline to affect its quality bonus payments in 2026, with formal CMS release of the 2025 Star ratings expected on or around October 10. Humana states the reduction resulted from narrowly missing higher industry cut points on a small number of measures, and it believes there may be potential errors in CMS's calculations of certain results and industry threshold cut points. The Company has outstanding appeals and has requested additional information.

It also says it is disappointed with the performance and has initiatives underway focused on operating discipline, member and provider engagement, customer experience, and technology integrations, which it expects to improve quality bonus payments in 2027 and beyond. Humana is exploring options to mitigate the expected 2026 revenue headwind if its challenges are unsuccessful. The Company states the 2025 Star results are not expected to affect its 2024 or 2025 financial results or outlook, but it notes there is now more risk in achieving its individual MA margin target of 'at least 3 percent' by 2027.