A New Chapter for Medicare Advantage: Court Ruling Spurs Recalculation of Star Ratings
A recent legal victory for Clover Health has set the stage for a significant recalibration in the Medicare Advantage star rating system for 2026. This decision, handed down by a federal judge, requires the Centers for Medicare & Medicaid Services (CMS) to reassess its current methodology, a move that analysts at Capstone have described as a “foreshadowing sign” of a potentially volatile future for the program.
Understanding the Court’s Decision
In May, the court determined that CMS had improperly utilized 20 metrics in calculating Clover Health’s 2026 star ratings. According to a detailed analysis by Crowell & Moring, ten of these metrics should have been included only following a notice and comment period, which CMS failed to initiate. This oversight led the court to rule that the measures were applied unlawfully.
While the court’s decision is specifically focused on Clover’s rating, the implications may ripple across the industry. Crowell & Moring highlight that the ruling underscores statutory data limitations that are not merely procedural. Adjusting the current law might demand congressional intervention, indicating broader impacts on Medicare Advantage plans.
The Broader Impact on Medicare Advantage
The recalibration of ratings could potentially alter the landscape for various insurers. Notably, UnitedHealthcare and Centene have previously succeeded in court over call center-related metrics, whereas Humana’s legal challenge in the same area was unsuccessful. Additionally, SCAN Health Plan won a case concerning CMS’s Tukey outlier method, which affects the calculation of star ratings.
Following this recent ruling, CMS announced plans to recalculate Medicare Advantage ratings, with modifications only being made if they would enhance a plan’s rating. Insurers whose ratings improve could resubmit bids for the 2027 plan year.
Aligning with Broader Administrative Goals
Capstone analysts have noted that the ruling aligns with the Trump administration’s objective to streamline the star ratings system. They suggest that CMS’s decision to use the court’s ruling to adjust its calculations reflects this broader reform agenda.
Despite the current recalculations, analysts expect CMS to appeal the decision. They also anticipate that the agency may reduce the number of measures used in the ratings, aligning with the Universal Foundation’s 10 measures from the Healthcare Effectiveness Data and Information Set (HEDIS) and Consumer Assessment of Healthcare Providers and Systems (CAHPS) datasets.
Potential Outcomes and Industry Response
The deadline for plans to notify CMS of their intention to resubmit bids for 2027 was last Monday, with the final submission due by June 29. However, Capstone warns that recalculating ratings could negatively impact some of the largest plans. For example, UnitedHealthcare’s largest contract might see its star rating decrease from 4.5 to 4.0 in 2026, with similar projections for Aetna’s contracts. Meanwhile, Humana’s largest Medicare Advantage contract is expected to remain unaffected.
Capstone’s earlier reports indicated that a recalculation could lower averages for payers such as Elevance Health, while significantly boosting Clover Health’s ratings. The ruling may also prompt other insurers to pursue lawsuits on similar grounds.
As the situation remains dynamic, with potential legal actions and an anticipated appeal by CMS, the future of Medicare Advantage’s star rating system is uncertain. However, one thing is clear: the industry stands on the brink of possibly transformative changes, influenced by legal, administrative, and legislative developments.
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