Dive Brief:
- A federal judge has thrown out an effort from Florida Blue to get regulators to hike its Medicare Advantage star ratings, setting the insurer up to lose tens of millions of dollars in bonus payments.
- Florida Blue, which covers roughly 150,000 MA beneficiaries in the state, filed a lawsuit in December arguing that the CMS shouldn’t have lowered its quality ratings following a massive flood in a South Florida county, which affected two of its plans’ ability to operate.
- However, plans only qualify for that loophole if the HHS declares a public health emergency, which didn’t happen in Florida Blue’s case. Though the insurer said that made the rule arbitrary and capricious, the D.C. district judge did not agree, ruling against Florida Blue in a Friday decision.
Dive Insight:
Every year, the CMS rates MA plans from one to five stars based on their quality of care, clinical outcomes and customer satisfaction. Plans jockey aggressively for the highest ratings, given that higher stars equate to higher revenue and a competitive advantage in their markets.
This can include lawsuits over scores plans believe to be unfairly low. After the CMS tweaked the star ratings system last year causing ratings for many plans to fall, a number of insurers sued the government to get their ratings raised with mixed outcomes.
Florida Blue’s suit didn’t take issue with the methodology change. Instead, it revolves around the “Extreme and Uncontrollable Circumstances Rule,” which allows the CMS to adjust star ratings when events beyond a payer’s control disrupts its ability to deliver care or meet other metrics.
To qualify, plans need to have a certain percentage of enrollees residing in a declared disaster area that’s designated for relief by the Federal Emergency Management Authority. The HHS also needs to declare a public health emergency.
Florida Blue’s “extreme and uncontrollable” circumstance is a massive rainstorm that struck Broward County, Florida, in the spring of 2023. The rainstorm lasted for four days, dumping two feet of rain in one day alone, causing historic flooding and disrupting Florida Blue’s ability to coordinate care for its thousands of members in the county, according to the insurer’s complaint.
Despite then-President Joe Biden declaring a major disaster and FEMA directing assistance to the area, the HHS did not declare a public health emergency.
The storm was followed by Hurricane Idalia, which hit Florida later that year. That time, the HHS did declare a public health emergency.
If regulators had done the same with the Broward County rainstorm, Florida Blue’s star ratings for 2025 would have been higher, according to the insurer.
Florida Blue’s lawsuit argued that the stipulations of the Extreme and Uncontrollable Circumstances Rule make it too difficult for plans to receive relief from ratings decreases from circumstances outside of their control. The rule also conflicts with other CMS rules about Medicare plan requirements during natural disasters, the insurer said.
Florida Blue asked the CMS to revise its ratings multiple times in 2024, but regulators declined, saying that the insurer did not qualify for the exemption. As a result, one of Florida Blues’ HMO plans received a 3.5 star rating instead of a 4.5 star rating, and one prescription drug plan received 2.5 stars instead of 3.0.
Now, D.C. District Judge Amit Mehta has decided that the CMS acted reasonably in denying Florida Blue’s request.
“CMS did not intend for the Rule to create a broad exception for Star Ratings adjustments. Rather, CMS sought to ensure that only a narrow set of the most affected contracts benefited from the Rule,” Mehta, an Obama appointee, wrote in his order Friday.
“Given the Rule’s narrow purpose, it was not arbitrary and capricious for CMS to tie the Rule’s application to the Secretary’s discretionary declaration of a public health emergency,” Mehta found, adding that it’s not the court’s place to overrule the agency.
“The court declines to disturb what is essentially a policy judgment by CMS,” the judge said.
The decision is a victory for regulators, which to date have received a mixed bag of court rulings over their stewardship of the MA star ratings program. A number of lawsuits are still pending.
