By Amina Niasse

NEW YORK (Reuters) – The U.S. government announced quality ratings for 2025 Medicare health and prescription drug plans on Thursday, indicating which large health insurers, including CVS Health (NYSE:CVS), UnitedHealth Group (NYSE:UNH), and Humana (NYSE:HUM), will receive bonus payments in 2026.

According to the Medicare agency's release, sixty-two percent of individuals currently enrolled in Medicare Advantage plans that cover prescription drugs are covered by plans rated four stars or higher, a decrease from 74% last year. About 40% of plans offered have four stars or more, down from 42% in 2024. The agency scores health plans from one to five stars, with five being the highest rating.

Low ratings can deter older Americans from renewing their Medicare coverage with certain insurers, decreasing plan enrollments, explained Joanna Gajuk, a research analyst at Bank of America.

Research firm KFF noted in September that the government was on track to distribute nearly $12 billion in bonuses related to star ratings for Medicare Advantage plans in 2024.

CVS Ratings Rise

CVS reported that 88% of its Medicare Advantage (MA) members are enrolled in plans rated four stars or higher, with over two-thirds in a 4.5-star plan. This includes its health insurance unit Aetna's two largest national plans. Last year, 87% of members were in highly rated plans.

CVS CEO Karen Lynch stated, "This is just another demonstration that we are on a path to improve Aetna's performance." The company has faced pressure from investors, including activist hedge fund Glenview, following a year of missed financial targets due to Aetna's struggles and increased medical care demands.

Earlier reports suggested that CVS might consider separating its pharmacy and insurance business. Its shares have fallen 15% this year to approximately $66.

Analyst Michael Wiederhorn from Oppenheimer indicated that Humana is "likely to track in line" with estimates from last week, suggesting only a quarter of its members will remain enrolled in 2025 for its 4+ rating plans, compared to 94% in 2024. Analyst Andrew Mok from Barclays noted that CVS is likely to gain members from Humana due to its lower ratings.