Dive Brief:
- Elevance is suing the CMS after the agency recalculated the Medicare Advantage star ratings of a competitor in a more favorable way than it did for other plans.
- After losing a lawsuit earlier this year, the CMS reran 2026 quality scores for Clover Health, dropping 20 measures that a judge ruled could not be factored in. Regulators then recalculated stars for other MA insurers last month, but cut out extra measures, too — measures that Elevance performed well on, the insurer argued in its complaint filed Wednesday in Georgia district court.
- Elevance says it lost out on $115 million in bonus payments as a result. The company is asking the court to force CMS to redo its own ratings using the same methodology as for Clover.
Dive Insight:
Insurers have never been shy about contesting their MA stars, given the scores are tied to lucrative bonuses and competitive advantages in the privatized Medicare program. But the last few years have seen a barrage of lawsuits from managed care companies unhappy with their stars amid slumping MA profits from seniors utilizing more expensive care and regulators cracking down on overpayments.
One such lawsuit was filed by insurer and physician enablement company Clover in November, after its largest plan’s star rating slipped from 4 stars to 3.5 stars. Clover argued the drop was based on an illegal choice by federal regulators to include improper measures in the ratings’ calculation — including 10 measures based on data they didn’t have the authority to collect, and 10 measures they included without going through the proper rulemaking channels.
In late May, a Georgia federal judge agreed, ordering the CMS to recalculate Clover’s rating without the disputed measures.
Regulators elected to proactively recalculate scores for all other MA insurers as well. For Clover, the CMS reran the company’s contracts without all 20 of the challenged measures. But it took a different tack with other plans.
For everyone else, the agency removed some measures addressed in the Clover case, retained others and cut some that weren’t an issue in the lawsuit at all, including complaints against the health plan, metrics on members choosing to leave the plan and whether a plan makes a foreign interpreter available for customer service.
That differential treatment left the CMS exposed to legal challenges, analysts said — a vulnerability that Elevance is now hoping to exploit, after its stars failed to rise under the CMS’ new methodology.
“CMS cannot rationally maintain that the same methodology is simultaneously legally defective (for Clover, necessitating recalculation) and legally sound (for all other MAOs [Medicare Advantage organizations], justifying no recalculation), absent some specific factual distinction between Clover and those other MAOs. No material distinction exists,” Elevance argued in its complaint.
According to Elevance, the insurer requested that the CMS adjust its star ratings using the same methodology before filing the lawsuit. But the CMS denied the request on June 26, per the complaint.
The CMS did not respond to a request for comment. But the agency has slogged through star ratings lawsuits with a mixed track record of success — 2026 is the third year that the CMS has been forced to recalculate payments for all or certain insurers following legal challenges.
Watchdogs have become increasingly concerned about the star ratings program, especially in light of research showing that the program doesn’t lead to improvements in plan quality and could be contributing to snowballing taxpayer spending on MA.
The federal government is set to spent more than $13 billion on the MA bonuses this year, higher than in 2025 despite a lower share of beneficiaries in high-performing plans, according to health policy research group KFF.
Worries about the efficacy of the star ratings program fold into broader concerns about overpayments in MA, including that insurers are gaming MA’s payment schema to inflate their reimbursement. The CMS came close to pausing enrollment in Elevance’s MA plans this year over reimbursement that wasn’t supported by proper data, but backed off after the company paid back hundreds of millions of dollars last month.
