My seventh Clover blog updates on the Elevance Health lawsuit (the first that was filed).
The lawsuit Elevance Health filed on July 1 on its Medicare Advantage (MA) Star Year (SY) 2026 Ratings is moving along. While a great deal remains unknown, the Elevance case could help us understand the timing of and conditions of any further changes in SY 2026 and what might be done in SY 2027. Elevance filed on July 1, while Scan did so about a week later and Alignment about 10 days later. Note my use of the words “could” and “might” as a great deal remains unknown.
Here is a quick update on the Elevance Health lawsuit since the complaint was filed. In its July 1 Complaint, Elevance Health argued the Centers for Medicare and Medicaid Services (CMS) acted arbitrarily and capriciously in calculating Clover Health’s Star rating change based on the judge’s “Clover Specific” (my phraseology) ruling and others in a different way. Elevance Health argues that it deserves the Clover Specific calculation. At the same time, Elevance does argue the court should opine further on whether various measures are authorized under statute and correctly noticed via the regulatory process. This goes beyond a strict calculation of what Clover received and points to a different or stricter measure set (perhaps over time) centered just on CAHPS, HOS, and HEDIS as well as excluding any measures in these groups that were not properly noticed through the regulatory process (what I call the “Clover Strict” interpretation). Scan and Alignment are arguing they deserve something along the lines of the Clover Script line.
- July 7 Request for Injunction By Elevance – Elevance argues CMS acted arbitrarily and capriciously and that Elevance will likely win on the merits. Elevance also says it would suffer irreparable harm if new SY 2026 ratings are not set and new bids cannot be submitted. Elevance wants the court to issue an injunction that would enjoin the agency from refusing to recalculate Elevance’s various contract Star Ratings for 2026 (in essence to force it to recalculate them). It wants an awarded ratings consistent with the Clover Health specific measure set. While the initial lawsuit in part raised such prospects, the injunction filing does not request voiding other plans’ ratings based on the CMS Recalculation just that this third scenario (Clover Specific) should be awarded to Elevance. But this could certainly open the door to other suits to allow this as well.
- July 10 Pre-Mediation Conference (The ever-inquisitive Jenn Kerfoot of DUOS broke this aspect of the story by leading people to the mediation transcript in PACER — Thank You) – An almost one-hour conference call was held with a magistrate to plan for mediation. But the conference call was telling. The magistrate had a clear sense of urgency to resolve the case and noted the judge had directed this. The government, though, has no such urgency (see more below). Elevance’s argument was that you cannot award one plan a different set of ratings from all others in the recalculation. Elevance likened Stars to “curved grading” and that the inputs are key in any such system. Elevance is right, Stars is very much graded on a curve, with Star ratings representing performance clusters from low to high. Obviously, different measure sets to grade one plan against another is unreasonable. One could argue the “better of” approach CMS took is a reasonable approach as every contract is graded against another in the Original Measures and CMS Recalculation. But how do you ignore the judge’s findings on given measures being deficient? And how do you give Clover a wholly different measure set to be rated on entirely? Indeed, the magistrate expressed confusion over how CMS could “use a different measuring stick for Clover and perhaps your client (Elevance) just merely because they filed suit when you’re supposed to have a standard, objective measurement of everybody using the same metrics.” The magistrate basically indicated that the mediation could very well be a binary choice (“Yes” or “No” on whether CMS will award the Clover specific rating to Elevance). And the magistrate wants CMS to document prior to the formal mediation what it is willing to do – grant the Clover measure set to Elevance, not move from its method of recalculation, or potentially do something else.
- July 14 and 15 Motions For Briefing and Response – Elevance argues that a dual track (moving on the Preliminary Injunction request briefing and the mediation) is the best way to preserve its rights given the urgency of the issue. CMS takes the position that there is no urgency here. Elevance argues there is time to revise its bids by mid-August for 2027 benefits (SY 2026 impacts 2027 payment) to account for the increased revenue and allow it to become more competitive in the market. CMS says the statute does not allow bids to be submitted after early June and any changes would have to be effective in CY 2028. Yet it allowed plans to resubmit just prior to July 1 during the recalculation. Elevance is right that with that precedent, they could resubmit bids in time for open enrollment in October.
- The Orders Regarding The Injunction Timing – The judge has ordered a quick process on deciding the injunction request. CMS’ response to Elevance’s filed preliminary injunction is due August 1. By August 4, Elevance will need to reply. The injunction hearing will be held August 7.
So, will we know soon what the path forward is?
Could a real answer and path forward come prior to the July 24 mediation? Will we have a good view of the path forward in early August after the injunction hearing?
I bet we know more, but it is hard to imagine there will be real or full clarity for other plans for SY 2026 and SY 2027?
CMS could do a few things prior to the mediation in setting its course:
- Agree to award Elevance the Clover measure set for its rating
- Hold its ground
- Agree to award Elevance the Clover measure set for its rating and add all other contracts to this (effectively offering the better of three options – Original, CMS Recalculation, and Clover Specific.
I tend to doubt CMS will go the third option, but it could throw in the towel given more suits that could arise if it goes with the first option. It might hold its ground right now and wait for the injunction decision. But we should know more about where things may go in July and what could possibly be any changes to the CSM Recalculation.
The Elevance judge is the same as in the Clover case. She is very familiar with the Stars program now and will likely make a decision swiftly on the injunction. That opens up Elevance’s best case that it could resubmit bids in mid-August. But the judge is likely not to go beyond simply awarding Elevance what Clover got. In her suit, she went out of her way to point out the overall deficiencies of the Stars program statutorily and regulatorily without striking the program in general or dictating anything but awarding Clover what it wanted.
We, too, have the very different cases from Scan and Alignment (which is quietly referenced in the Elevance suit). Any agreement or decision in the Elevance case is unlikely to settle these cases – unless CMS were to come up with some radical four-scenario better-of recalculation. These cases are in the D.C. district court. Answers could be swift here, too, but lag Elevance.
I would predict that Elevance gets its Clover Specific measure set demand and that Alignment and Scan could also get the ten-measure set-aside that gives them something like a Clover-Strict ruling. If that is the case, then a Wild West, balkanization, four-scenario better of could become a reality.
Plan Preview begins in early August. Since Plan Preview 1 is more about allowing plans to submit data discrepancies and appeals on reported values, it is unlikely CMS will give guidance on what it will do in terms of any better of scenarios for SY 2027. Too much will be in flight and decisions pending or just in. Plan Preview 2 (in mid-September) will likely be the time all this becomes much clearer.
#cms #stars #medicareadvantage #quality
— Marc S. Ryan
