The flux around CMS Star Ratings continues.
Lawsuits from health insurers over Medicare Advantage Star Ratings have increased in recent years, though with varying results. Some plans like SCAN and Elevance have won their cases while others like Humana received unfavorable results. Following SCAN and Elevance’s cases, CMS ultimately recalculated ratings for 2024 after a judge determined that CMS didn’t calculate the ratings the way they had said they were going to.
Conflict between CMS and payers over Star Ratings have persisted, as in late May, yet another health plan notched a victory: Clover Health. A judge found CMS improperly calculated Clover’s ratings. That led CMS to announce last week that it is voluntarily recalculating its 2026 Star Ratings for some plans.
This recalculation boosted Clover’s rating from 3.5 stars to 4.5 stars. Star Ratings are important as CMS provides bonus payments to plans with higher ratings. Clover alleged that its initial rating would have led to $120 million in missed bonus payments.
Specifically, the federal judge ruled that CMS improperly used 20 quality measures when calculating Clover Health’s 2026 Medicare Advantage Star Rating because the agency relied on data sources not authorized by law and failed to follow the required public rulemaking process. This includes measures on medication adherence and call center data.
“This was not a math error, and that distinction matters,” said Esteban Lopez, partner in West Monroe’s Healthcare & Life Sciences practice. “The court took issue with how CMS got to its numbers, including the data sources it relied on and its decision to fold in certain measures without going through proper notice-and-comment rulemaking. The problem was CMS’s legal authority and process, not whether the underlying quality topics are worth measuring.”
This was a new argument compared to previous cases for Star Ratings, which largely focused on technical issues, according to one expert.
“Clover was able to succeed by making a really novel argument — that some of the measures were not authorized under the enabling statute and therefore they should never have been included,” said Ari Gottlieb, principal of A2 Strategy Corp. “That was a new argument that differed from what we’ve seen recently, which are more tactical things like the methodology around collecting the inputs to the measures or even challenges to math in how CMS rounds up or down.”
In its memo to Medicare Advantage organizations, CMS stated that it is only recalculating ratings if it’s higher than the previously assigned rating. If the recalculation results in a lower rating, CMS will not update it.
What does this mean for other health plans?
Only a small number of health plans will benefit from this recalculation, though it’s difficult to say how many, according to Gottlieb. It’s also still possible that CMS will appeal the judge’s decision on the Clover Health case.
“[Recalculating] seemed to be the most prudent action CMS could take to sort of eliminate the potential for having 50 lawsuits filed against them,” he said. “The story isn’t over. We don’t really know how it’s going to end, but so far it looks like a pretty big win for Clover, in that they’re at least preserving or increasing their payment rate for 2027.”
Lopez noted that the plans most impacted are the ones near certain thresholds, particularly right under four stars, where even a half-star change makes a big financial difference.
“That kind of movement flows straight into quality bonus payments, rebates, the benefits a plan can offer, bid strategy, and where it stands against competitors. This is not a broad windfall, and plans should resist assuming it works in their favor until they have run their own numbers,” Lopez said.
Another healthcare expert — Dr. Sanjay Doddamani, founder and CEO of Guidehealth — noted that it’s too early to determine the full impact of the recalculations. However, he anticipates CMS to continue evolving the star rating program by removing measures where providers are already consistently achieving high levels of performance, focusing on a smaller number of measures that matter most and increasing the emphasis on outcomes.
For 2027, CMS is removing multiple measures focused on administrative processes, such as metrics on making timely decisions about appeals and availability of foreign language interpreters. Doddamani noted that when there is a smaller number of measures in the star rating calculations, there’s the potential for more variation because each measure carries more weight.
“[Reducing the number of measures] is not necessarily good or bad, but it does increase the importance of getting the methodology right and ensuring that the measures being used are meaningful, outcome-oriented, and reflective of better patient care. Health plans and providers alike value predictability and stability. As CMS continues to evolve the program, the challenge will be balancing simplicity, outcomes, and measurement rigor while maintaining confidence in the ratings system,” Doddamani said.
Photo: suwadee sangsriruang, Getty Images
