Dive Brief:
- CVS Health is suing the federal government in a bid to improve its 2027 Medicare Advantage star ratings — and head off a more than $2 billion revenue hit as a result of its falling quality scores.
- The healthcare giant filed a complaint Monday in Georgia district court arguing that the CMS’ methodology is illegal, since regulators relied on improperly adopted measures to calculate stars for next year.
- The lawsuit asks the court to vacate star ratings for dozens of CVS’ contracts and force the CMS to recalculate the scores without the disputed measures.
Dive Insight:
CVS is the latest in a growing list of insurers turning to the courts in a bid to hike their 2027 MA star ratings, after the quality scores slipped for many operators, threatening the lucrative bonus payments and other competitive advantages the ratings represent.
To date, at least four other insurers — Alignment Healthcare, Healthfirst, SCAN Health Plan and Centene — have sued the government over their 2027 stars.
The lawsuits cite a judge’s ruling last spring in a case brought by insurer Clover Health alleging that 20 measures the CMS used to determine 2026 scores were illegal. However, the CMS still used half of the contested measures in calculating ratings for the coming year for every insurer except Clover.
At the time, experts said that decision opened the agency up to litigation. And now, insurers that saw their stars degrade are rushing through the door.
That includes CVS, which saw the percentage of members in MA plans rated four stars or above drop from 84% in 2026 to 67% in 2027.
“This Complaint does not ask the Court to break new ground; that is because this Court already considered and disposed of identical legal arguments in [the Clover suit],” CVS argued in its complaint filed in Georgia Southern District Court — the same court that ruled in favor of Clover in May.
The lawsuits all make near-identical legal arguments: that the CMS calculated the scores using measures that were beyond the agency’s statutory authority to consider or adopt without proper notice-and-comment rulemaking, in violation of the Administrative Procedure Act.
But each seeks to overturn a different set of measures, depending on which dinged the insurer’s scores.
Alignment, the first insurer to sue a day after stars were published earlier this month, is taking issue with 10 measures. So is SCAN. Healthfirst wants to overturn five measures, while Centene wants to overturn 17.
CVS is seeking to exclude 28 measures — the most of any insurer thus far.
Without the disputed measures, 43 of CVS’ contracts would have nabbed a star rating at least 0.5 points higher, according to the complaint.
CVS’ case is also unique in the scale of purported financial harm. Lawsuits from other insurers say they stand to lose a few hundreds of millions of dollars as a result of the lower scores. But CVS — a major MA operator with 4.2 million beneficiaries — claims it will lose $2 billion in extra payments in 2028, the year in which payments are adjusted based on the 2027 scores.
The $2 billion in lost revenue is a drop in the bucket compared to CVS’ annual premiums, which reached almost $135 billion in 2025. However, the hit would wipe out the company’s operating income for its Aetna health benefits division, which was $1.8 billion last year.
When the CMS released star ratings, analysts said the step-down for CVS was manageable, especially because the company’s enrollment in four-plus star plans was still higher than many of its peers. But it could threaten to derail CVS’ margin recovery plans, which are just starting to bear fruit this year as Aetna wrangles down elevated spending on Medicare seniors’ care.
The insurer cut benefits and exited unprofitable markets coming into 2026, actions that turbocharged CVS’ profit in the second quarter. CVS is hoping to continue that momentum.
“Our priorities for our Medicare Advantage business are very clear. We need and we are committed to returning it to the appropriate margins in Medicare Advantage,” Steve Nelson, the president of Aetna, said during an investor conference in September.
Pressure on the CMS to reform star ratings is building on multiple fronts. Along with insurers, which argue the program is overly complex and changeable, budget hawks and health policy researchers have criticized it for not improving plan quality and contributing to snowballing taxpayer spending on MA.
CMS paid out at least $12.7 billion in bonuses last year, according to estimates from the health policy research group KFF.
