(Reuters) -Humana said on Wednesday that a lower-performance rating for a widely used Medicare insurance plan hurt enrollments for 2025 and will potentially hit the health insurer's revenue and bonus payments in 2026, sending shares down about 23% premarket.

The company said it has about 1.6 million, or 25% of its total members, currently enrolled in the plans rated 4 stars and above for 2025, down from 94% in 2024.

The star rating for a Humana contract, which accounts for about 45% of its Medicare Advantage memberships, dipped to 3.5 in 2025 from 4.5 a year earlier, according to preliminary data released by the Centers for Medicare & Medicaid Services on Tuesday.

Humana said the reduction in star ratings was driven by narrowly missing higher industry cut points on a small number of measures, and it was the reason for the decline in enrollment for its top-rated plans for 2025.

The star ratings, on a scale of 5, determine the reimbursement levels and can sway enrollees in choosing plans.

Shares of the company, which have fallen nearly 39% so far this year, slipped to $208.10 before the bell on Tuesday.

"Humana is exploring all available options to mitigate the expected 2026 revenue headwind related to its 2025 Star ratings," the company said.

The decline in star rating for 2025 will impact Humana's quality bonus payments in 2026, the company said.

Humana said it believes "there may be potential errors" in the federal agency's calculation of some results and industry wide points.

It said appeals to certain results are pending, and Humana has requested additional information from the agency.

Health insurers, which offer Medicare Advantage plans, are paid a set rate by the government to manage healthcare for people aged 65 and older or with disabilities.

Star rating details for 2025 are expected to be formally released by the agency on or around Oct. 10.

(Reporting by Sriparna Roy in Bengaluru; Editing by Shinjini Ganguli)