Humana’s largest Medicare Advantage contract, covering more than 2 million members, rose from 3.5 stars to 4, putting it back above the bonus threshold.
- Alignment Healthcare’s largest California contract, H3815, fell from 4 stars to 3.5.
- Aetna said more than 69% of its Medicare Advantage members are in 2027 plans rated 4 stars or higher, and President Steve Nelson said the results “highlight our distinction in the market.”
- Crossing 4 on CMS star rating unlocks bonus payments that raise the federal money an insurer receives per member.
Humana (HUM) shares surged as much as 13% in after-hours trading Thursday after the Centers for Medicare & Medicaid Services released 2027 Medicare Advantage star ratings, a quality scorecard that decides which plans earn extra federal bonus payments, while Alignment Healthcare (ALHC) tumbled 23% after its largest contract fell below that cutoff.
CVS Health fell about 3% in extended trading, and Clover Health rose about 10%.
Why The Stars Move The Stocks
Medicare Advantage is the private version of Medicare. CMS scores each contract from 1 to 5 stars on measures such as clinical outcomes, member experience, and how the plan is run. The 4-star mark is the cutoff that matters to investors. Crossing it unlocks bonus payments that raise the federal money an insurer receives per member. Dropping below it takes that bonus away.
The ratings published Thursday do not change this year’s results. They feed payments in 2028, which is why a single half-star move on a large contract can be worth hundreds of millions of dollars.
Humana Clears The Bonus Line
Humana was the clearest winner. Its largest Medicare Advantage contract, covering more than 2 million members, rose from 3.5 stars to 4, putting it back above the bonus threshold, CMS data showed.
The rebound matters because Humana was hit hard the last time CMS published ratings. In October 2024, the share of its members in plans rated 4 stars or higher fell from 94% to 25%, after a large contract dropped from 4.5 stars to 3.5. That cut the bonus payments the company was set to receive in 2026. Thursday’s recovery puts that large contract back in line for bonuses in 2028.
Alignment And CVS Lose Ground
Alignment Healthcare moved the other way. Its largest California contract, H3815, fell from 4 stars to 3.5. That contract accounted for about 81% of membership, so the downgrade knocked most of the company off the bonus list even though six of its seven rated contracts still scored 4 stars or higher, including three at 4.5. Dawn Maroney, president of Alignment Health, said the California rating “is inconsistent with that performance” and that the company “intend[s] to pursue all available administrative remedies and to litigate the measures and methodologies we believe warrant review,” while remaining confident it can return the contract to at least 4 stars.
CVS, through its Aetna unit, also lost ground. Aetna said more than 69% of its Medicare Advantage members are in 2027 plans rated 4 stars or higher, and President Steve Nelson said the results “highlight our distinction in the market” and give the company confidence it can return to “appropriate margins.” The smaller stock move reflected a broader book than Alignment’s, so a slip on part of it does not rewrite the whole company’s 2028 revenue.
Clover Health said CMS gave the plans covering about 98% of its members a 5-star rating for 2027, the score that sets 2028 payments. A smaller plan scored 4.5 stars. The 5-star score leaves out 20 measures a federal judge told CMS not to count in a May ruling that the agency has appealed. With those measures included, Clover said, the larger plans would have scored 4.5 stars.
How Did Retail Traders React?
On Stocktwits, retail sentiment around HUM and ALHC was ‘bullish’ at the time of writing.
While HUM stock has gained 51% year-to-date, CVS added 11%, and CLOV 95%. ALHC, in the meantime, has fallen 56%
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