Medicare Advantage Star Ratings Revised by CMS After Court Ruling
The Centers for Medicare & Medicaid Services (CMS) is revising Medicare Advantage Star Ratings for 2026 after a court determined inaccuracies in Clover Health’s ratings. This adjustment may lead to increased payments for a select group of insurers.
The evolving judicial landscape surrounding Medicare Advantage Star Ratings has seen health insurers like SCAN and Elevance challenging CMS's rating calculations. Recent legal successes, such as Clover Health's, underscore ongoing debates about the accuracy and legitimacy of CMS's methods, following a mandated reassessment after alleged computational errors.
Notably, CMS upgraded Clover Health’s rating from 3.5 to 4.5 stars. These ratings are crucial as they dictate CMS bonus payments, with higher ratings attracting larger financial incentives. Clover contended that its initial rating could have resulted in a financial shortfall of approximately $120 million in bonuses. A federal decision upheld Clover's argument, critiquing CMS's usage of unauthorized quality measures without appropriate regulatory compliance through public rulemaking.
According to Esteban Lopez, a partner in West Monroe's Healthcare & Life Sciences sector, the issue stemmed from CMS's unauthorized data sources rather than computational errors. Industry expert Ari Gottlieb noted Clover's focus on legal authorization rather than technical disputes over data or calculation methods.
CMS stated it will only adjust ratings if a reassessment shows an improvement over the previously assigned ratings, though it may still challenge the court's ruling in Clover Health's favor. While the effect on other health plans remains uncertain, only a few are expected to gain from this recalibration. Lopez suggested that for plans just below critical benchmarks, such changes could significantly influence quality bonus payments and competitive positioning.
Dr. Sanjay Doddamani, CEO of Guidehealth, believes CMS will continue refining the star rating system. Future changes, including those anticipated for 2027, aim to drop certain administrative measures, potentially increasing variability by assigning more weight to fewer metrics. Doddamani emphasized that ensuring methodological robustness in these metrics is crucial for maintaining confidence and stability among healthcare providers and plans.