New York, January 27, 2026, 05:08 EST — Premarket
- Humana shares were set to drop roughly 12% in premarket action following a U.S. proposal that suggested Medicare Advantage payment growth in 2027 would be minimal.
- CMS proposed tougher limits on risk scores, restricting diagnoses that come from unlinked chart reviews.
- Investors are closely monitoring insurer earnings calls alongside the April 6 final rate notice for any hints of a shift in the proposal.
Humana Inc (HUM.N) shares dropped roughly 12% in premarket trading Tuesday, leading a broad selloff among U.S. health insurers following a Medicare Advantage payment proposal that fell well short of Wall Street’s estimates. In extended hours, Humana was last seen near $231. (Barron’s)
The annual Medicare Advantage rate notice is a Washington update that can swiftly upend earnings forecasts. It establishes the baseline payments private insurers receive to manage government-backed plans for seniors and people with disabilities—and it directly influences the benefits they’re able to provide.
The Centers for Medicare & Medicaid Services announced its proposed payment policies for 2027, aiming for a net average increase of 0.09%, which amounts to over $700 million. The agency framed the package as a move toward improved “payment accuracy” and updating the risk-adjustment framework. CMS Administrator Dr. Mehmet Oz said the intent is to make Medicare Advantage “work better for the people it serves.” (Centers for Medicare & Medicaid Services)
CMS reported an effective growth rate of 4.97%, but that gain was mostly wiped out by a 3.32% drag from risk-model tweaks and normalization, along with a 1.53% cut from dropping diagnoses tied to unlinked chart reviews. When factoring in estimated risk-score trends influenced by coding and population shifts, the expected average payment change climbs to 2.54%. Comments must be submitted by Feb. 25. (Centers for Medicare & Medicaid Services)
This wasn’t just a Humana story. UnitedHealth slipped roughly 9%, and CVS Health also fell about 9% in early trading. UnitedHealth’s drop alone weighed heavily on the Dow. A JPMorgan analyst pointed out that the preliminary Medicare Advantage rate notice has typically been revised upward in recent years—a detail bulls will likely hold on to. (MarketWatch)
Insurers and investors are focused on a tough downside: if the proposal stands and medical-cost inflation persists, plans might need to slash benefits or hike member charges to maintain margins. A trade group for the health insurance industry cautioned that keeping funding flat amid rising expenses could force benefit reductions and push out-of-pocket costs higher for about 35 million Medicare Advantage enrollees. (Financial Times)
Humana pushed forward with some company-specific updates on Monday, announcing a partnership with Carda Health to broaden access to virtual cardiac rehab. The goal: tackle obstacles like transportation and scheduling. “Our collaboration with Carda Health is helping to remove barriers,” said Dr. Alex Ding, Humana’s deputy chief medical officer. (Humana)
Humana is set to report its fourth-quarter results on Feb. 11. The company will hold a live Q&A that morning, where it plans to discuss earnings guidance for 2026. (Humana)
Traders are now focused on any near-term signals from insurers about the proposal, starting with this week’s earnings calls. “People were ballparking this flat rate to be closer to 4 to 5%,” said Kevin Gade, chief operating officer at Bahl & Gaynor. CMS is set to release the final rate announcement on April 6. (Reuters)
