Diving overview:
- Elevance has initiated a lawsuit against CMS after it recalibrated the Medicare Advantage star ratings of its competitors, favoring them over others.
- Following a lawsuit loss earlier this year, CMS adjusted Clover Health’s 2026 quality score, omitting 20 metrics a judge deemed invalid. Last month, the regulator recalibrated ratings for other Medicare Advantage insurers, removing additional metrics as well. Elevance boasts strong performance, stating in its filing. The complaint was submitted on Wednesday in a Georgia District Court.
- Elevance claims it faced a loss of $115 million in bonus payments due to these changes and is requesting the court mandate CMS to reevaluate its ratings using the same criteria applied to Clover.
Dive Insight:
The competition for Medicare Advantage’s star ratings is fierce, as these scores influence significant bonuses and competitive positioning within the privatized Medicare landscape. Recently, the STAR program has faced numerous lawsuits from dissatisfied managed care companies as profits have declined, attributed to older adults opting for costlier care while regulators have tightened overpayment controls.
In November, Clover filed its lawsuit after witnessing its top plan’s star rating drop from 4 to 3.5 stars. Clover contended that this downgrade stemmed from federal regulators improperly incorporating certain measures into their rating process—10 actions based on data they weren’t authorized to collect, along with another 10 actions that bypassed the necessary regulatory framework.
In late May, a Georgia federal judge sided with Clover, instructing CMS to recalculate its ratings without considering those disputed actions.
CMS has proactively decided to adjust scores for all other Medicare Advantage insurers as well. In Clover’s situation, the agency revised the company’s contract without retaining those 20 contentious actions. However, for other plans, CMS handled it differently.
Some measures related to the Clover case were removed, others retained, and additional unrelated metrics were also discarded, such as those concerning health plan complaints, voluntary plan exits, and the use of foreign interpreters for customer service.
Analysts suggest that this inconsistent treatment might expose CMS to legal scrutiny. Elevance, unable to achieve a star rating with the new CMS methodology, is attempting to exploit this inconsistency.
Elevance argues, “CMS cannot logically maintain that the same methodology is legally flawed for Clover yet legally sound for other Medicare Advantage organizations, especially given the lack of factual differences among them.”
The insurer claimed that it had sought uniform methodology for star rating adjustments prior to filing its lawsuit, but CMS rejected this request on June 26, as mentioned in the complaint.
CMS has not responded to inquiries for comment. Nevertheless, the agency continues to navigate star rating litigation, which has produced mixed outcomes, and 2026 will mark its third year of such efforts. Legal challenges have compelled CMS to recalculate payments for various insurers.
There is growing worry among watchdog groups regarding the Star Ratings program, particularly as research indicates it may not result in enhanced plan quality and could contribute to increased taxpayer expenditure on Medicare Advantage.
This year, the federal government anticipates spending over $13 billion on Medicare Advantage bonuses, a rise from 2025, despite the dwindling number of beneficiaries enrolled in high-performance plans, according to KFF, a health policy research organization.
Concerns surrounding the star rating program also tie into wider worries about potential overpayments in Medicare Advantage, including whether insurers are exploiting payment systems to inflate reimbursements. Earlier this year, CMS nearly suspended enrollment in Elevance’s Medicare Advantage plans due to questionable reimbursement data but reversed this decision after the company repaid hundreds of millions last month.
