UnitedHealth win in CMS case a positive for Humana, sector: Leerink

Leerink said it sees UnitedHealth’s (NYSE:UNH) win in a lawsuit against the Centers for Medicare and Medicaid Services over its Stars rating as a positive read for Humana (NYSE:HUM) and the Medicare Advantage industry.

The investment firm noted that on Friday, a Texas district court ruled in favor of UnitedHealth (UNH) over a call center metric that the company claimed was used unfairly to downgrade its Stars rating. As a result, CMS will now have to recalculate the rating without the call.

“While a positive, we think the outcome of this case drives a largely immaterial financial tailwind to UNH (UNH) but is a big win for the sector,” Leerink said in a note, pointing out that several others in the industry have also filed similar suits against CMS.

Leerink said the ruling has now made it “incrementally positive on the prospects” of Humana (HUM) winning its Stars case, although the timing of a resolution in that case is still unclear. It added that the UnitedHealth (UNH) case resolution could mean that the Humana (HUM) case will be resolved sooner than it thought.