Showing How Watershed The Stars Ruling Was, My Fourth Blog On The Clover Decision This Month

June 22, 2026

CMS’ approach is right and should move quickly to return the program to its SY 2029 vision

This is my fourth Clover-related blog this month, but the ruling was so watershed — and the potential impacts so far-reaching — that I had to tackle the topic again. I, too, wanted to signal to the Centers for Medicare and Medicaid Services (CMS) why it is so important to hold plans harmless now as well as push to salvage its 2029 vision for a more targeted Stars program.

For those who are just getting up to speed or need to on the issue, here is a brief synopsis of the events of the last month or so on this important Medicare Advantage (MA) Star Year (SY) 2026 Ratings issue.

A federal judge ruled that 20 Star measures either were not allowed because they are not prescribed in statute or did not go through proper Administrative Procedure Act (APA) notice requirements. The court directed CMS to recalculate Clover’s SY 2026 rating.
That led CMS to recalculate Clover Health’s main contract for SY 2026 from 3.5 to 4.5 Stars and direct the managed care company to submit an alternate bid for payment year 2027.
A short time later, CMS then came back and recalculated many contracts’ SY 2026 ratings by using a “better of” methodology similar to how it handled the now infamous Tukey decision some years ago. The agency looked at each contract’s SY 2026 rating and compared the original rating with one based on fewer measures tied to the court decision. But the list of measures it included in the refined rating did not exactly comport with what the judge ruled. Contracts were held harmless if their new rating was lower than the original. Thus, no contract did poorer – you could only rise.
CMS continues to say it could appeal the district court ruling and that the hold harmless strategy does not set a precedent for SY 2027 and beyond.

What did the judge say and what did CMS do for SY 2026?

At first, many of us reported that the judge pulled 20 measures from the SY 2026 measure count. These were the ones that Clover specifically challenged. But a closer reading of the decision points to the fact that CMS may only be able to use data collected under 42 U.S.C. 1395w-22(e), which only covers HEDIS, CAHPS, and HOS measures. That would remove all operational measures and drug measures and leave 29 measures. But the judge’s ruling seemingly takes out another 8 measures unchallenged by Clover, leaving as few as 17 measures total for SY 2026 (28 not 20 removed).

Despite the judge’s ruling on certain CAHPS and HOS measures, CMS turned around and had a net 10 additional measures in its “better of” recalculations. (It is thought just the Clover contract recalculation excluded these ten measures to conform with the ruling) CMS may have decided to include the struck CAHPS and HOS measures because the quality statute calls out CAHPS and HOS, it plans to appeal the striking of some of them on procedural grounds, and it may have mitigated impacts to contracts overall.

In the end, the judge’s ruling pointed to a 17-measure program, CMS’s recalculation to a 27-measure program, and CMS’ SY 2029 restructuring to a 34-measure program. The primary difference between CMS’ recalculation and SY 2029 restructuring is drug measures and Part D CAHPS would be in the program in SY 2029.

How did plans fare with the recalculation?

There are about 515 rated MA contracts. Industry experts can have different assessments based on assumptions, but in general a little less than 10% of contracts fared better and got higher ratings than before. Showing how tough HEDIS, CAHPS, and HOS can be, just short of 40% would have fared worse if they were not held harmless. Last, just over 50% of contracts had results that were comparable to their original rating. Most large plans did not seem to fare too much better, except for HCSC (which bought Cigna’s Medicare business) and Humana (whose ratings have been in the doldrums). Some regional Blues and integrated health systems won, as did some new startups.

Many have asked if CMS did in fact recalculate ratings correctly, especially as it relates to changing Reward Factor, CAI, and Improvement data given the changes in measures. While we have not seen the complete data sets yet for the industry (CMS uploaded some recalculation data on 6/22), of the plan changes I have reviewed it does appear that everything that needed to be thought through was on these key parameters.

Where do I stand?

On the CMS SY 2029 restructure — Eliminating the operational measures certainly impacts 25% to 40% of contracts in terms of ratings and revenue, with far more seeing drops in average scores. But the changes can be justified on policy grounds. Perhaps quality was arbitrarily boosted by these measures that are far more tied to operational performance than true quality achievement. Refocusing on HEDIS, drug, and CAHPS and HOS surveys is not a bad idea. And even introducing some sort of transparency metrics dashboard for operational measures and more might be another good reform.

On the Clover decision itself – The judge is probably right that a strict reading of the statute does not allow all the measures that were put in the program over the years, including Part D drug measures. Only under the new Loper paradigm (post-Chevron) did courts take a hard look at what the statute actually said. As well, plans have often complained that CMS has not abided by the APA and attempted to sneak things through without adequate notice and vetting. While some plans may be upset by the decision in this case, the judge has stood up for fairness in how the Stars program is run.

On CMS’ recalculation – As I noted, CMS did not abide strictly by the judge’s ruling and that could lead to other lawsuits. But if this is an effort to defend its appeal rights, it was not without merit. More important, the better-of or hold-harmless approach was the fairest to all plans. Plans relied on the published measures and those who would have been harmed by a midstream change were justifiably held harmless. It may take months or years to sort all of this out so CMS should award the same hold harmless approach for SY 2027 if necessary. That could go for SY 2028 as well depending on the timing of any legislative action. This is critical to the 40% or so of plans that get hurt by the Clover approach, which could further destabilize plan revenue in the ongoing financial recovery and lead to more benefit erosion.

Worries for SNPs and highly penetrated duals plans — While I support an overhaul of the program, it is clear that the new approach would further exacerbate the inequity felt by Special Needs Plans (SNPs) and those who generally have higher membership of duals and Low Income Subsidy (LIS) enrollees. We know today that these plans tend to have average ratings that are 0.3 lower. Outcomes on clinical measures can be even worse than that. The sunset of the Excellent Health Outcomes for All (EHO4all) health equity index in favor of keeping the Reward Factor took a major opportunity for revenue away from these plans. Both the SY 2029 restructure and a potential Clover-like program create more challenges for these plans just as more and more duals gravitate to MA. For sure, holding these plans harmless is essential until a final strategy is crafted. More so, any new strategy should address this emerging inequity.

Congress and CMS should get together and fix this – I do not believe Stars is going anywhere. It is too important to value-based care overall. But the decision does throw more uncertainty into Stars and plan finances. While CMS should appeal aspects of the case, Congress and CMS should get together this year and fix all this. A stump of a Star quality program is not in the best interests of CMS, Medicare, MA plans, beneficiaries, or the public at large. Certainly the Part D program should have quality ratings. CMS and Congress should:

Pass legislation that makes clear that the CMS SY 2029 plan is legal and is the one that should move forward.
Include a hold harmless for SY 2027 and SY 2028 at a minimum.
Examine and fashion solutions to address the existing and growing inequities related to lower ratings for SNPs and highly penetrated duals plans.
Avoid further changes for now, including proposals that would make the program budget neutral rather than additive.
Phase in a separate transparency dashboard for multiple operational areas to engender greater faith in MA.

What do plans need to do for now?

Unfortunately, the path forward is a bit unknown. Plans should not turn their improvement strategy upside down. Plans should be seeking to maximize all measures in place for SY 2028. But hopefully an assessment has been made of the impact of the SY 2029 restructure and where plans need to focus under this new world order. But since the new world order could change again, plans will need to focus now on three scenarios — as the chart below shows. How do plans do on the SY 2029 restructure, on the CMS interpretation of the Clover suit, and perhaps on an even more narrow program if somehow higher courts agree with the district court judge and CMS has not remediated process flaws.