Just after the Centers for Medicare and Medicaid Services (CMS) issued Star Year (SY) 2027 results, we got some new lawsuits attacking the agency’s calculations, in part related to the favorable treatment obtained again by Clover Health. So, it was time for a comprehensive update on SY 2026 and SY 2027 litigation. I have tried to keep the updates short and cogent, but Stars is not that at all right now.
Where we stand on litigation
We had four 2026 Stars measure lawsuits — Clover, Elevance, Scan, and Alignment.
We now have three 2027 Stars measure lawsuits — Alignment, Healthfirst, and Centene. Alignment and Centene filed in the same Georgia southern district as Clover did. Healthfirst filed in a New York district court.
SY 2026 litigation update
CMS’ appeal of Clover decision SY 2026: CMS filed its appeal in late July and proceedings are just getting going. No response to the appeal has been filed yet by Clover. CMS makes four main arguments in its appeal. All of them appear to be stretches to me. As a refresher, the Georgia federal district judge determined that ten measures did not have statutory authority and ten others failed regulatory disclosure requirements.
First, the agency argues the venue was improper.
Second, it argues “services” are not “benefits.” It says the district court treated bonus payments to Medicare Advantage (MA) insurers as “payment for services.” The government says “services” mean medical care from hospitals and providers, while “benefits” mean insurance coverage. It says Star Ratings affect insurer bonuses, not provider payments for services.
Third, it argues “based on” does not mean “based exclusively on.” The district court said ratings should be based only on specified data. The government says this ignores binding Eleventh Circuit and Supreme Court precedent.
Fourth, CMS argues the remedy was an abuse of discretion. The court ordered a recalculation using a cherry-picked set of measures, setting aside only those where Clover scored poorly. Measures where Clover scored well were equally flawed under the court’s own reasoning but were left in place. The government argues this is inequitable and inconsistent with the regulatory harmless-error standard.
Elevance SY 2026: A temporary injunction request was denied by the court. Standards for such injunctions are very high. An amended complaint and motion for summary judgement was filed by Elevance and a response filed by CMS.
Elevance continues to argue that some of its contracts in SY 2026 deserve the same treatment as Clover, citing the deficiencies surrounding 20 measures. It argues legal questions have been resolved and the court should also remove the 20 measures removed from calculations. CMS argues that the court must await the results of its appeal to the appellate level and that Clover is likely to be reversed. It says Elevance is not entitled to the Clover judgment.
Scan and Alignment SY 2026: The cases, in a Washington, D.C district court, are nearly identical and are at the summary judgement motion stage, with the plan filing motions and CMS responding. Both plans argue that the CMS recalculation removed ten measures found to have deficiencies by the Clover judge, but not ten others. The plans want those additional ten measures struck and their ratings recalculated.
The plans argue the ten measures were never adopted by regulation as required for issues that govern payment for services, eligibility, or scope of benefits. They are asking for a quick decision as the 2027 payment year begins soon.
CMS is arguing many of the themes in its Clover appeal and any relief should be a plain remand. Removing only plaintiffs’ “handpicked” measures would be inequitable and misleading to consumers.
SY 2027 litigation update
Alignment SY 2027: The day after the Stars announcement, Alignment filed suit on its SY 2027 ratings. Alignment has filed in the same federal court in the District of Columbia it is litigating its 2026 ratings. Its complaint is very similar to its arguments for SY 2026, although arguments are more forceful. Alignment alleges its ratings were determined “in flagrant violation” of statute. Alignment says CMS “has completely departed from Congress’s vision of leveraging predictable, valid measures developed with input from providers, plans, and the public.” It argues many of the same things it has been putting forth in its 2026 suit, including regulatory violations. Alignment again says CMS used the same ten measures without adopting their specifications by regulation.
Just 25% of Alignment’s members would now be in plans with 4 or more stars for 2027, down from 100% in 2026. Alignment asked CMS on October 6 to redetermine its 2027 ratings without the ten measures. CMS denied that on October 7, one day before the ratings issued. The complaint alleges four contracts were wrongly rated and that over $200 million will occur in lost payments, plus reputational and competitive harm. It argues exhaustion is satisfied because regulations bar administrative challenges to the rating methodology. Alignment wants the court to vacate the ratings and direct CMS to recalculate its ratings.
Healthfirst SY 2027: Healthfirst of NY filed its appeal on October 19. The Healthfirst argument is much like Alignment and Scan, except that only five measures are challenged. Healthfirst asked CMS to recalculate and the agency declined. It claims the lower ratings that resulted will cost the plan over $380 million in 2028 payment year rebates and quality bonuses, plus reputational and competitive harm. It also wants its ratings vacated and a recalculation.
Centene SY 2027: Centene just filed suit and argues that CMS violated the Administrative Procedure Act (APA) in determining its 2027 ratings. Centene says that CMS ran afoul of “core statutory safeguards” in deploying 17 measures. Because of that, Centene says its 4 Star and greater enrollment dropped from 18% to 9% and cost the company $448 million in quality bonus payments for payment year 2028. Centene’s lawsuit parallels the Clover one but has three fewer measures.
Most importantly, Centene makes this fabulous point: CMS tacitly admits its methodology is wrong because it applied a different calculation to Clover in both 2026 and 2027.
Summing it all up
Each case argues that CMS ran afoul of the statutes and regulations when it comes to the measure sets it is rating plans on. But plans cherry pick the measures they want to exclude.
Clover argues that 20 SY 2026 measures had statutory or regulatory problems and won.
Elevance argues it deserved the Clover measure set for SY 2026 as well, so essentially the same 20 measures.
Alignment and Scan argue that SY 2026’s CMS recalculation measure set needed 10 more measures thrown out to be consistent with the Clover judge’s decision. (An argument can be made that these cases essentially agreed with the 20 Clover measure deficiencies.)
For SY 2027, Alignment essentially argues similarly as it did in SY 2026.
Healthfirst wants 5 measures thrown out.
And now Centene argues 17 are deficient.
Will more lawsuits come
I predict more lawsuits on SY 2027 to come and I certainly do not blame plans for defending their interests.
CMS and Congress have to repair all the deficiencies and end the lawsuit madness. They need to get together to lay out a program that makes policy sense and has all problems addressed. 35 million people rely on Medicare Advantage for their coverage. The program is already fluid enough due to rate and other variables. We do not need more Star noise.
I suspect CMS will load up the 2028 regulatory rule that will come out in draft form in November with fixes. But that will not be enough. Congress needs to weigh in, too.
#cms #medicareadvantage #stars #quality
— Marc S. Ryan
