An otherwise responsible agency has an alarming arrogance in its Star oversight and processes
For the past two years we have seen major lawsuits against the Centers for Medicare and Medicaid Services (CMS) on how they conduct the Stars program in Medicare Advantage (MA). The Stars program is not only important for grading the quality of outcomes in private managed care, but also is the lifeblood of supplemental benefits and other enhancements to fill in the holes in traditional Medicare fee-for-service (FFS). Without a well-functioning equitable, and reliable Star quality bonus system, we cannot really gauge quality or ensure consistent benefit additions in the MA program.
Brief history of 2024 Star lawsuits
Lawsuits against CMS on the 2024 Star ratings largely revolved around the implementation of the Tukey outlier adjustment implemented for that year’s ratings. The methodology removes so-called outlier performance at both the top and bottom of performers. Outliers are results that are far outside the average value of a group of statistics. CMS argues that removing outliers would better evaluate quality outcomes in the non-CAHPS survey measures and that not removing outliers generally skews performance evaluation upward. Since there are more lower outlier performers, implementing Tukey tended to move all cut points for impacted measures upward, therefore making it harder to achieve higher results. This had the greatest impact on previously high-performing (prior to 2024) contracts.
Scan and Elevance Health (as well as Zing Health and Hometown Health) filed lawsuits and argued that CMS was wrong when the agency did not follow existing regulations regarding guardrails when setting cut points during the 2024 Tukey implementation. CMS did not apply 5% guardrail movement limitations (up or down) to actual 2023 guardrails and instead applied them against a 2023 Tukey simulation. The regulation is clear in that CMS must set cut points against the previous year’s actual cut points even if that meant the impact of Tukey would not be rolled out for several years. Judges in the cases agreed and ordered the agency to adjust both Scan’s and Elevance’s 2024 Star results. This led the agency to make a mass adjustment to all plans’ 2024 results.
2025 Star lawsuits
With Tukey’s implementation somewhat addressed, MA plans have now moved on to other issues in challenging CMS’ Star policies and implementation. There are now seven lawsuits challenging 2025 Star calculations. Here is a quick recap of the lawsuits:
UnitedHealthcare’s and Centene’s lawsuits largely are focused on the scoring of Call Center measure scores. The United case has been resolved and led CMS to recalculate the call center measures and overall ratings for both companies. UnitedHealthcare received higher ratings in 12 contracts and Centene in seven contracts. Centene’s suit closely mirrored United’s and that is why it received new ratings too.
The call center TTY and foreign language response time measures are most subject to arbitrary analysis and inconsistency by CMS and its vendor. Plans may be blamed for technological failures outside of their responsibility. Elevance Health won on these points as well last year.
Right around the presidential transition, CMS announced it would appeal the court decision in favor of United. A few days later, CMS backtracked and said it would not appeal. My sources tell me that the decision to appeal was made by the Biden administration leadership and that CMS decided to reverse course due to the transition. It is unclear if there was a White House directive to abandon the appeal or simply CMS had a sober re-evaluation of the appeals’ merits and an awakening as to the fact that a new administration may have different priorities.
Florida Blue’s (BCBS of FL) lawsuit argues a very technical point on consistency in applying disaster adjustments. The insurer says a state of emergency declared in 2023 was not recognized by CMS in Star calculations. The plan says it would have improved its scores for several measures and its overall ratings. The insurer argues CMS was not consistent in its 1135 waiver declarations, which are tied to the broader states of emergency.
Humana and Elevance Health filed hard-hitting lawsuits attacking how CMS administers the Star program holistically, arguing CMS is arbitrary and capricious in its oversight and decision-making. As well, there is an argument that CMS is simply not transparent with health plans on Stars. Humana says CMS is not following its own regulations by not disclosing all Star ratings calculation criteria or responding adequately to data discrepancies reported by the plan.
Blue Cross and Blue Shield of Louisiana accuses CMS of being arbitrary and capricious as well regarding Star ratings related to a consolidation of contracts. It says CMS did not follow its own regulations.
Alignment Healthcare is among the most recent to file a lawsuit. Its suit is more along the lines of Humana and Elevance in that it attacks how CMS administers the overall program. It says:
- The Tukey outlier is arbitrary, capricious, and bad science.
- The Star program is biased against smaller plans.
- CMS’ delegation of authority to vendors such as Maximus is unconstitutional and the vendors make significant mistakes and act in an arbitrary manner.
- How CMS administers the CAHPS survey measures is illegal.
- There is no reasonable method to appeal and challenge decisions related to Star decisions by CMS and vendors.
I find Alignment’s lawsuit the most interesting and thorough. Check out these excerpts from Alignment’s suit:
“CMS’s error-prone, lackadaisical approach to the Star Ratings does not appropriately reflect their importance to the MA program. Like all stakeholders connected to the program, Alignment counts on CMS to administer Star Ratings in a consistent, transparent, and rational manner.”
“Notwithstanding its industry-leading performance, Alignment brings this suit because the Star Ratings system no longer can be counted on to produce rational, predictable results. The Star Ratings system cannot work if CMS is allowed to promulgate rules based on bad data science, outsource the bulk of its work to unaccountable private entities, and turn a blind eye to data errors that arbitrarily disadvantage smaller Medicare Advantage organizations like Alignment.”
The significance and lessons
Note that I used the word “breaking” in the title of this blog. That is different than “broken.” At base, I think the Stars program represents a good way to measure MA plan performance and CMS deserves overall credit for developing a reasonable system over the past few decades. But the program is “breaking” because MA plans have lost faith in how CMS runs the program. An otherwise responsible agency has an alarming arrogance in its Star oversight and processes. When plans push back, CMS has become a bit like the Queen of Hearts in Lewis Carroll’s 1865 Alice’s Adventures in Wonderland: “Off with their heads!” (Or perhaps more like the bloodthirsty Parisian mob 72 years earlier, which chanted something similar as they witnessed Marie Antoinette’s execution.)
Unfortunately, when it comes to Star, CMS usually has to be dragged kicking and screaming before it reveals key information, data, and calculations and only seeks to reform or correct things when a court says CMS must do so. The MA plans’ long list of grievances over the past few years are not wrong and bear repeating here:
- CMS lacks transparency when administering Stars.
- CMS rules and policy around many measures are unclear and the agency has made little effort to outline or clarify them.
- The agency does not adequately disclose all the data, details, and information plans need to calculate their own Stars to assess where they are and whether the CMS calculations are fair.
- Critical improvement measure information is received only during Plan Preview.
- The consumer assessment (CAHPS) and health outcome (HOS) surveys are fully anonymized and plans must trust CMS and its vendor to choose samples that meet enrollment criteria and then calculate all factors and scores correctly. The CAHPS case mix adjustment is a black box as well.
- There have been reports of inaccurate designation of Low Income Subsidy (LIS) individuals, which impacts the Categorical Adjustment Index (CAI), measure calculation, and potentially vast swaths of health plan operations.
- While certain Tukey information has been released, calculating cut points indeed has been a challenge. Humana says it could not replicate 60% of CMS’ cut point calculations after Star ratings were released and CMS was not disclosive when they asked the agency for additional information.
- It took CMS until recently to clarify Health Equity Index two-year blending and there are other critical questions still unanswered.
- CMS and its vendors have major data miscalculations and discrepancies.
- CMS has inadequate oversight of the capabilities and operations of its vendors.
- When rules are clear, CMS does not follow them when calculating measures, which gives rise to plan claims the agency acts arbitrarily and capriciously. TukeyGate was a great example of CMS simply ignoring clear regulations.
- CMS does not afford adequate appeals rights to plans when data discrepancies and miscalculations are alleged. It does not take input from plans when there are legitimate questions on scores or ratings.
- CMS’ Stars program or at least its approaches could discriminate against smaller plans.
Are small plans discriminated against in Star?
I think Alignment’s observation about Star now being biased against smaller plans is a good one that needs investigation by CMS and Capitol Hill. CMS and Capitol Hill seem to be concerned with the vertical integration and size and scope of large healthcare organiations. About three-quarters of all MA enrollment is controlled by seven large national players. CMS also says it wants to see SNPs (who serve those with social determinants of health and have co-morbidities) grow and flourish so as to control the huge costs of dual populations and improve their outcomes. While big plans have SNPs, many community based plans focus here.
The sad reality is that CMS’ Star program as well as the agency’s approach to regulating it mean huge costs for smaller plans. The way Star measures are calculated (Tukey, CAHPS, HEI, drug measures, operational measures, and more) may also favor larger not smaller plans. Unlike big plans, smaller plans do not have the vast resources to throw at Stars or fight CMS when it wrongly calculates Stars. Constant changes to Stars also create hurdles for smaller plans. It is not surprising that many smaller plans have abandoned MA recently. The biggest part of it may have been two years of bad rates (2024 and 2025), but some part of it was the recognition of the unlevel playing field of Star and other CMS policies in MA.
Conclusion
I would argue MA plans support a robust and fair Stars program. But CMS is straying far from that premise. Its recent inclination to appeal the United Stars case before backing off underscores that it is misguided in its thinking on Star and its relationship with MA plans. I have been a historic supporter of CMS, but the event shows a need to change the agency’s outlook on the quality program and policy overall.
Capitol Hill will look at the reasons behind falling Star scores as well as whether the government is getting its value from MA rebates from the Star program. But Congress should also look at whether CMS is fairly and transparently running the Star program as well as force it to reform.
#cms #stars #medicareadvantage #quality #congress
— Marc S. Ryan