Humana says 95% of its Medicare Advantage members are now in plans rated four stars or better. Alignment Healthcare's largest contract fell below that line, and its shares touched a 31% loss before recovering part of it.
October 9, 2026
Tickers: HUM, ALHC, CVS, UNH, ELV, CLOV, XLV
The government's annual Medicare Advantage report card produced the largest single-stock moves in health care on Friday. Both winners and losers are being paid, or penalized, for revenue that will not show up for more than a year.
The Centers for Medicare & Medicaid Services published its 2027 Star Ratings after Thursday's close. The scores, on a scale of one to five, determine quality bonus payments in 2028. Insurers with plans rated four stars or higher receive bonuses and keep more of their rebates.
Humana's reversal
Humana said 95% of its Medicare Advantage members are enrolled in plans rated four stars or above for 2027, and 42% in plans rated 4.5 stars. It has six 4.5-star contracts and 12 rated 4.0, and 11 more contracts at four stars or above than a year earlier. A year ago, by analysts' estimates, only about 41% of its members were in plans at that level.
In a filing, Humana said it has exceeded its goal of "Top Quartile" results, which it defines as Stars revenue per member per month 10% above the peer-group median. Humana put the gain at roughly $160 of extra revenue per member each month and said it would spend the windfall on one-time investments and shareholder returns. "We're extremely proud of these Star Ratings," Chief Executive Jim Rechtin said.
The stock
Humana shares opened at $449.54 and touched $456.50, up 17.9%, before easing. At about $434 in early afternoon, they were up 12.1% from Thursday's $387.12 close and about 4.9% below the session high. The move added roughly $5.6 billion to Humana's market value. The Health Care Select Sector SPDR fund rose about 1.6%, leaving Humana about 10.5 percentage points ahead of its sector.
Analysts have put the 2028 effect at $3 billion or more of added revenue, at TD Cowen, and up to $4.8 billion in bonus payments, at Evercore ISI. Friday's gain in market value is already about 1.2 to 1.9 times those figures. They are revenue estimates, not profit; analysts at Baird noted that the earnings effect depends on how much Humana reinvests in member benefits and provider arrangements.
Alignment's contract
The news was worse at Alignment Healthcare. Its California HMO contract H3815, which serves about 75% of its health-plan membership, fell to 3.5 stars from 4.0. Its six other eligible contracts kept ratings of four stars or higher, three of them at 4.5. The company said the change will not affect revenue in 2026 or 2027 but will reduce quality bonus payments in 2028, with risk-sharing arrangements with providers offsetting part of the hit.
Alignment said the rating "does not accurately reflect" the contract's long-standing performance and that the ratings were released "among ongoing legal and policy concerns regarding the methodologies." Chief Executive Dawn Maroney said the company remains confident it can return the contract to at least four stars.
Alignment shares fell as far as $6.01 on Friday, 31% below Thursday's $8.71 close, before recovering to about $7.65, a loss of 12.2%, or roughly $220 million of market value.
The rest of the industry
Across the program, about 37% of Medicare Advantage drug plans earned four stars or more for 2027, covering about 71% of enrollees, CMS said. UnitedHealth and CVS Health saw fewer members in top-rated plans. CVS said about 70% of Aetna members are in plans with four stars or more. UnitedHealth rose 2.6% and CVS slipped 0.7%.
Competing readings
One reading is that Humana has rebuilt its revenue base. Nearly all of its members are now in bonus-eligible plans, it beat its own top-quartile target, and rivals moved the other way, which strengthens its position heading into open enrollment.
A second reading is that the market has paid for 2028 revenue in a single morning. The bonus dollars are two years out, part will be reinvested in benefits, the stock gave back almost a third of its peak gain within hours, and the methodology is contested: CMS recalculated last year's ratings after a lawsuit, and Alignment is signaling a challenge.
What comes next
Medicare's annual enrollment period opens Oct. 15. Insurers' third-quarter calls later this month are the first chance for management to put a dollar figure on 2028. Any appeal or lawsuit over the methodology would affect both companies' numbers.