A court ruled against certain regulations. CMS continued to apply them. Centene now claims it lost half a billion dollars.
Summary: Centene argues that CMS employed 17 unlawful measures for its 2027 Medicare Advantage Star Ratings, leading to a loss estimated at $448 million.
Parties involved: Centene Corporation along with 35 of its subsidiaries against the Department of Health and Human Services (HHS) and the Centers for Medicare & Medicaid Services (CMS).
Key issue: The potential loss involves around $448 million in bonuses and rebates linked to a significant number of Medicare Advantage contracts.
Importance: A court had previously invalidated similar measures for another insurer, which CMS subsequently dropped, yet continued to apply them to other companies.
Status: A complaint was filed on October 22, 2026; a ruling from the court is still pending.
Seventeen quality metrics. Over three dozen contracts. Centene Corporation claims that the federal government’s flawed system cost it nearly half a billion dollars using guidelines that had already been invalidated by a court.
The managed care company filed a lawsuit against HHS and CMS in the US District Court for the Southern District of Georgia. The complaint asserts that CMS used 17 unauthorized measures to calculate Centene’s 2027 Medicare Advantage Star Ratings — the performance scores determining the government’s payments to health plans annually.
The half-billion-dollar discrepancy
Star Ratings function as more than just evaluations; under the Medicare Advantage system, plans achieving four stars or above gain access to bonus payments from CMS and retain a larger portion of generated savings. These funds typically enhance benefits, lower premiums, and fund care programs for members. Conversely, plans scoring lower receive reduced funding, impacting their ability to attract enrollees.
Centene’s complaint estimates approximately $448 million in bonus payments and rebates that it believes it would have secured if CMS had evaluated its plans without incorporating the disputed measures. The document details each contract, highlighting states from Georgia to California and Iowa to New York, claiming that most would likely have received improved ratings.
Two specific contracts face a more pressing issue. Plans scoring below three stars are marked with a public warning on the Medicare Plan Finder, which tends to detract enrollees and brokers. If a plan is flagged for three consecutive years, CMS can revoke the contract entirely. Centene argues that both contracts would have surpassed the three-star threshold if the contentious measures had not been applied.
Regulations that were already nullified
Centene’s main argument revolves around the assertion that this is not a new situation. In May 2026, the same court ruled in the case of Clover Insurance Co. v. HHS that 20 metrics used by CMS to evaluate Clover’s 2026 Star Ratings were illegal. The court determined that CMS had either relied on data not authorized by Congress for rating purposes or had implemented the measures without a public rulemaking process that allows industry input before rule adoption.
As a result, the court mandated CMS to reassess Clover’s ratings without those measures, and CMS obliged. Additionally, when it published the 2027 ratings on October 8, CMS voluntarily removed the same measures from Clover’s evaluation, despite the court order only applying to the preceding cycle.
Centene frames this action as an acknowledgment of the measures’ illegality. If CMS could drop the measures for Clover, the argument holds, it has implicitly recognized their illegitimacy. Still, the same measures were applied to every other health plan, including Centene.
What Centene seeks
In the complaint, Centene requests the court to annul its 2027 Star Ratings across all affected contracts, order CMS to recalculate these ratings minus the 17 contested measures, remove warning labels from the two problematic contracts, and enable Centene to adjust its 2028 bids based on the revised scores.
The complaint further highlights the competitive ramifications. Star Ratings are publicly accessible on CMS’s Medicare Plan Finder, and the document argues that poor ratings disadvantage Centene when individuals, brokers, and employers select plans. Because ratings are relative, it suggests that competing health plans may appear artificially enhanced due to the same measures that negatively influenced Centene’s scores.
These claims have yet to be evaluated, and no court has made a decision regarding their validity.
