By Josh Nathan-Kazis

Investors are beginning to weigh how the big health insurers will fare as the federal government assigns quality ratings to their Medicare Advantage plans, with significant effects on their stock prices.

Those quality ratings are vital to the insurers. Higher ratings bring bonus payments that amount to billions of dollars a year for the biggest companies. When the ratings dip, it can wipe out the profitability of a large healthcare services company's Medicare Advantage business.

While the federal government hasn't announced the ratings and bonuses for the 2026 plan year, clues as to how they could shake out were emerging on Tuesday. The result was major swings in managed-care stocks.

Humana, which specializes in Medicare Advantage plans, was down 8.5% Tuesday afternoon. UnitedHealth Group, which opened up on Tuesday morning after saying overnight that 78% of its Medicare Advantage members would be in highly rated plans, kept climbing in the afternoon, and was up 9.2%.

CVS Health, which also offers Medicare Advantage plans, was up 3.6%. Centene, a smaller Medicare Advantage provider, was up 7.6%.

Medicare Advantage, the government-funded health plans that are managed by private insurers, has turned into a tricky business in recent years, as seniors have sought out higher-than-expected levels of medical care. Shares of Humana and UnitedHealth have both taken a major beating over the past 18 months.

Good news on next year's bonuses would have major implications for the earnings trajectories of the companies most deeply involved in Medicare Advantage. CMS will pay out at least $12.7 billion in quality bonus payments to highly rated plans in 2025, according to the policy group KFF.

The Centers for Medicare and Medicaid Services, which administers the Medicare Advantage program, changes how it calculates the quality ratings from year to year. The ranking system for the 2026 plan year was released to insurers on Monday night, according to a Tuesday note from Leerink Partners analyst Whit Mayo, and posted to LinkedIn midday on Tuesday by an industry expert.

CMS didn't immediately respond to a request for comment on the LinkedIn post

The implications of the 2026 ranking system aren't immediately apparent. In his Tuesday note, Leerink's Mayo wrote that more than half of the measures on which CMS assesses Medicare Advantage plans got more difficult.

"The initial industry reaction from our consultants and [key opinion leaders] is this is a challenged look for the industry," Mayo wrote.

For UnitedHealth, which has already told investors how it believes its plans fared, anxieties are fading. But for Humana, investors seem to be taking the clues as a bad sign.

Write to Josh Nathan-Kazis at josh.nathan-kazis@barrons.com

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September 09, 2025 16:49 ET (20:49 GMT)

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