Strap in for the Clover Stars roller coaster ride. We are still violently looping around.
Just when you thought the Clover Health Star Ratings saga could not get any more complicated, it has.
In my August 17 blog on the fallout from the Clover decision, I laid out again what I call the growing “balkanization” of Medicare Advantage (MA) Star Ratings. We effectively have different potential rating scenarios depending on which interpretation of the Clover decision is applied. And different health plans are now in court seeking the calculation that benefits them the most.
Since then, we have had three important developments.
First, the SCAN Health Plan and Alignment Healthcare cases are moving forward in Washington, D.C. Second, a federal judge denied Elevance Health’s request for a preliminary injunction, but gave Elevance some very encouraging language on the merits. Third, the Centers for Medicare and Medicaid Services (CMS) has now filed its opening appellate brief asking the Eleventh Circuit to overturn the underlying Clover decision.
So, here is the latest on all three fronts—and what I think happens next.
SCAN and Alignment Push the “Clover Strict” Argument
SCAN and Alignment are pursuing very similar cases in the U.S. District Court for the District of Columbia. As I have explained before, their argument is somewhat different from Elevance’s.
SCAN and Alignment are focused on the second major finding in the Clover decision: that 10 Star measures could not be used because their specifications were not properly promulgated “by regulation.” Briefs from both sides on the plaintiffs’ request for summary judgment have been filed.
Both plans argue that CMS cannot continue using those measures simply because the agency published detailed specifications through Technical Notes rather than formal rulemaking. Their basic position is straightforward: if these specifications determine Star Ratings, and Star Ratings ultimately determine hundreds of millions of dollars in MA payments and rebates, CMS must comply with Medicare’s notice-and-comment requirements.
SCAN says eliminating the challenged measures would move two contracts from 4.0 to 4.5 Stars and produce approximately $125 million in additional 2027 rebates. Alignment says its affected contracts would move to 4.5 Stars as well, worth approximately $50 million.
CMS strongly disagrees. The agency argues that these technical specifications do not themselves establish substantive standards governing payment for medical services. It also points to the 2025 Humana decision, which was much more favorable to CMS on this question.
CMS also makes an interesting remedy argument. Even if the plans are right that specifications should have gone through rulemaking, CMS says plans should not be able to selectively remove the measures that hurt their ratings while retaining other measures potentially subject to the same legal problem. In essence, this is what Clover did and a judge allowed.
I continue to believe SCAN and Alignment have meaningful cases. But unlike Elevance, they are not before Judge Lisa Godbey Wood, who decided Clover. The D.C. court is not bound by the Clover ruling, and CMS has contrary precedent it can point to.
Elevance loses the injunction—but not the merits of the case by any means
The Elevance Health development is particularly interesting. Judge Wood denied Elevance’s request for a preliminary injunction on August 27. At first blush, that sounds like a significant defeat. But I don’t think it is. The result was not unexpected because Elevance was asking for extraordinary relief. It wanted the court to force CMS to change its rating before the underlying case had been fully decided. The standard for that type of mandatory preliminary injunction is extremely high. And Elevance could not get over that bar.
The court found that Elevance had not sufficiently demonstrated imminent and irreparable harm. The judge also noted that Elevance waited until July 2026 to sue even though the original ratings were published in October 2025. That delay did not exactly help Elevance argue that emergency judicial intervention was suddenly necessary.
But here is the much bigger point — Elevance did not lose the underlying case. In fact, Judge Wood reaffirmed her Clover reasoning and found that Elevance is substantially likely to succeed on the two core merits claims paralleling Clover. The injunction was denied primarily because Elevance failed to meet the heightened requirements for immediate relief, not because the judge suddenly decided CMS was right on the underlying Star Ratings issues. I therefore continue to believe Elevance has a better-than-even chance of ultimately winning meaningful relief.
CMS does have a legitimate argument that Clover is different because Clover actually went to court and obtained a judgment. A judgment generally binds the parties before the court; it does not automatically become universal relief for every MA plan. But we still have the broader problem I have been highlighting for months. How can CMS give Clover one calculation, turn around and create an entirely different recalculation for everybody else, and maintain that this is a coherent, fair, and equitable Star ratings system? CMS’ June recalculation removed all Part D measures and additional Part C measures, retained some measures Judge Wood had found problematic, and then applied the recalculation only when it helped a contract.
That is why this mess is far from over.
CMS takes Clover to the Eleventh Circuit
Meanwhile, CMS is trying to eliminate the problem at its source. The agency has now filed its opening brief with the U.S. Court of Appeals for the Eleventh Circuit asking it to overturn Clover. CMS essentially makes four arguments.
First, it says the Clover case never belonged in the Southern District of Georgia because the important agency decisions occurred elsewhere. That venue argument matters enormously because CMS could potentially wipe out the Clover judgment without the appellate court ever resolving the bigger Star Ratings questions.
Second, CMS attacks the ruling that the technical measure specifications had to be promulgated through regulation. CMS says Star specifications do not themselves govern “payment for services” within the meaning of the Medicare statute. Stars may influence payments to MA organizations, CMS argues, but that is different from regulating payment for healthcare services furnished by providers.
Third, CMS challenges Judge Wood’s interpretation of the statutory language saying Star Ratings are “based on” specified quality data. CMS says “based on” does not mean “based exclusively on.” In other words, Congress did not prohibit CMS from using additional sources such as call-center, disenrollment and prescription-drug data.
And fourth, CMS attacks Clover’s remedy. CMS argues Clover selectively challenged measures that hurt its rating while retaining other measures that helped it, even though those measures arguably suffer from the same alleged legal defects. CMS says that if the supposed defects were applied consistently, Clover would have remained at 3.5 Stars rather than jumping to 4.5 Stars.
That last argument gets directly at one of the central questions now facing the entire industry: if part of the Star Ratings methodology is legally defective, does a plan get to remove only the offending measures that hurt it, or does CMS have to reconstruct the entire methodology consistently? The Eleventh Circuit could have a great deal to say about that.
I don’t buy the venue argument made by CMS.
I am sympathetic to CMS’ argument that other avenues to clarify and prescribe Stars should be available outside of the cumbersome regulatory process as long as it is made clear in the rule and advertised well. But the problem is that CMS has played fast and loose with regulations over the years and tried to take extraordinary discretion in Stars. Remember Tukey? In a post-Chevron age, judges tend to have a very strict view of regulatory process and clarity.
CMS’ argument that it has wide discretion on what is measured is also suspect in a post-Chevron world. It should be dictated by Congress.
CMS’ last argument has the most merit. Of course, plans should not be able to pick and choose what measures it should be rated on. But CMS has so many statutory and regulatory deficiencies here. It is hard to feel sympathy with CMS on this argument.
Where does all this go?
So where are we? Still in a pickle.
CMS has the Original Star Year 2026 Ratings. It has the CMS Recalculation using its “better of” methodology. Clover received what I call the Clover Specific calculation. Elevance wants that treatment. And SCAN and Alignment are pursuing what I call the Clover Strict calculation. That is a lot of measuring sticks for one quality program.
And now we are quickly approaching Star Year 2027. Plan Preview 2 is expected around September 9, and this could be the next major clue about how CMS intends to manage this mess. CMS could conceivably create another “better of” scenario for Star Year 2027 as it attempts to protect plans while preserving its legal arguments on appeal. Indeed, another better-of approach may be the easiest short-term administrative solution.
It seems the most equitable despite all the regulatory and statutory problems that exist and need to be fixed. But even that likely will not necessarily end the litigation. More lawsuits could emerge due to all the legal snafus and arguments for due process from plans. If multiple legally plausible rating scenarios exist, and CMS awards plans based on only some of them, plans that would receive a higher rating under another scenario have an obvious incentive to challenge CMS.
In essence, Clover may have created an environment where plans can calculate the Original Rating, CMS Recalculation, Clover Specific, Clover Strict, whatever CMS might come up with next, and then ask a very simple question: Which one gives me my highest Star Rating? If the answer is not the methodology CMS chooses to award, litigation remains an option. That is an extraordinarily difficult way to administer a national quality program.
My longer-term view has not changed. Stars will survive. CMS will fix the regulatory deficiencies, and Congress will have to fix some of the statutory ones. The restructuring already underway for Star Year 2029 and on will help and is the right move.
But that does not solve the immediate problem. For Star Year 2026 and potentially Star Year 2027, Clover opened a Pandora’s box. Elevance, SCAN and Alignment are testing how far the decision extends. CMS is asking the Eleventh Circuit to close the box again.
And until the courts or CMS establish one defensible measuring stick for everybody, plans have every reason to keep asking whether they are entitled to the best Star Rating available under any legally supportable scenario.
Plan Preview around September 9 could tell us a lot.
But given everything that has happened so far, I am not betting that it ends the saga.
#cms #medicareadvantage #partd #stars #quality
— Marc S. Ryan
