More insurers are filing lawsuits in an attempt to hike their Medicare Advantage quality scores after a court decision earlier this year exposed federal regulators to a new line of legal attacks.
SCAN Health Plan and Alignment Healthcare both sued the CMS in D.C. district court last week, arguing regulators robbed them of higher star ratings in the privatized Medicare program.
The CMS reran MA star ratings for insurers in June after losing a lawsuit brought by Clover Health. Clover had argued that regulators improperly factored 20 measures into its star ratings calculation for 2026, and a judge agreed, ordering the CMS to recalculate Clover’s scores without them.
However, the agency retained 10 of the contested measures when recalculating stars for all other MA insurers, a decision that’s now sparking a raft of complaints. The lawsuits from SCAN and Alignment, filed Tuesday and Friday respectively, follow an initial suit from Elevance Health, which lodged its own complaint earlier this month.
The CMS’ decision not to extrapolate Clover’s methodology industry-wide led Elevance to miss out on $115 million, according to the insurer’s complaint. And now, SCAN is saying it lost out on $125 million, while Alignment claims it was deprived of $50 million.
Both insurers say they asked the CMS to redetermine their stars and that regulators refused, in a violation of the Administrative Procedure Act, according to the complaints.
SCAN and Alignment are asking a judge to vacate their 2026 stars and order the CMS to recalculate them without the disputed measures.
Insurers are increasingly turning to the courts in a bid to boost their MA star ratings, which synthesize a plan’s quality information on a scale from 1 to 5 stars and directly influence a plan’s reimbursement. Changes in star ratings can have large implications on payment — just a single half-star change can equate to hundreds of millions of dollars for a plan.
The star ratings program is one facet of a larger controversy around MA, with critics concerned that insurers are gaming the program’s financing system and receiving inflated payment from Medicare. Some Medicare policy experts, including MedPAC, a group that advises Congress, argue that the ratings system is due for an overhaul, saying it’s overly complex, doesn’t improve plan quality and may be contributing to overpayments.
The lawsuits from SCAN and Alignment — which are both represented by the law firm Latham & Watkins — allude to larger calls for reform and cite MedPAC’s censure of the star ratings system.
“The Star Ratings program went off the rails years ago,” reads SCAN’s complaint. “The system is undeniably broken.”
