UnitedHealth (NYSE:UNH) led a rally in the managed care space on Tuesday after the health insurer reaffirmed its 2025 earnings outlook for the second time this week and issued a favorable update on its Medicare Star Ratings performance.
Shares of Eden Prairie, Minnesota-based UnitedHealth (NYSE:UNH) climbed ~8% in reaction, marking its second-biggest intraday gain this year and cutting its YTD decline to ~31%.
Its peers, such as Centene (CNC), Clover Health (CLOV), CVS Health (CVS), and Alignment Healthcare (ALHC), also traded higher.
However, Humana (NYSE:HUM), the second-largest player in the Medicare Advantage Market after UnitedHealth (NYSE:UNH), dropped ~9%, as Leerink Partners suggested that the criteria designed to calculate Star Ratings for MA plans have become more challenging.
The Louisville, Kentucky-based health insurer has unsuccessfully contested Medicare’s 2025 Star Ratings results in an ongoing court battle.
Citing a LinkedIn post, Leerink noted changes to the performance thresholds known as cut points that Medicare uses to determine Star Ratings. According to Leerink, a majority of the cut points have become more challenging.
Medicare’s Star Ratings system leads to bonus payments for health insurers with top-rated MA and Part D plans, making it a key determinant of their financial performance.