Elevance Health Challenges Medicare Star Ratings in Legal Dispute
Elevance Health Inc. has taken legal action against the Centers for Medicare & Medicaid Services (CMS) and the U.S. Department of Health and Human Services (HHS), accusing these agencies of inconsistent standards in the 2026 Star Ratings calculations for Medicare Advantage plans. The insurer asserts that while CMS adjusted a competitor’s ratings after a court ruling, similar treatment was not extended to Elevance. This oversight led to an estimated $115 million loss in Quality Bonus Payments projected for 2027.
At the core of this dispute is the Medicare Advantage Star Ratings system, which evaluates plans using a five-star scale focusing on quality, compliance, and performance metrics. These ratings not only influence consumer enrollment decisions but also determine the qualification of Medicare Advantage organizations for financial incentives, such as Quality Bonus Payments and increased rebate retention.
Elevance contends that the financial incentives tied to Star Ratings are vital for insurers as they facilitate improvements in member benefits, premium reductions, and funding for quality enhancement activities. The lawsuit points to a court decision that found 20 of CMS's ratings measures non-compliant with Medicare Act requirements due to unauthorized data reliance and lack of proper rulemaking procedures.
The complaint alleges that CMS adjusted Clover Health's 2026 Star Rating by removing the unlawful measures, a change Clover disclosed in a regulatory filing. Elevance argues that if similar adjustments were made for its ratings, it could have significantly boosted its forecasted Quality Bonus Payments for 2027. The insurer emphasizes that these ratings, accessible via CMS's My Plan Finder tool, are crucial in shaping competitive dynamics among insurers.
Before filing the lawsuit, Elevance requested that CMS re-evaluate its 2026 Star Ratings using the methodology applied to Clover, a request that was denied. Now, Elevance seeks a court order for CMS to exclude the same 20 measures from its Star Ratings calculations. The legal challenge underscores the broader implications of Star Ratings for Medicare beneficiaries and competition within the insurance market.
Stock performance data revealed a decline in Elevance Health’s share value, closing down 0.96% at $413.89, amid a period when the stock was approaching its 52-week high. This development highlights the financial impact and heightened scrutiny surrounding the company amidst its ongoing legal battle.