Elevance Health Lawsuit Against CMS: Implications for Medicare Advantage Ratings

Elevance Health has launched a lawsuit against the Department of Health and Human Services and the Centers for Medicare & Medicaid Services (CMS). The insurer claims that CMS failed to adjust its 2026 Medicare Advantage Star Ratings in the same manner as Clover Health's ratings. A federal court found CMS improperly relied on unauthorized data for Clover Health, leading to a recalibration of Clover's ratings from 3.5 to 4.5 stars by excluding incorrect quality measures.

The Star Ratings are crucial as CMS provides higher bonus payments to plans with superior ratings, impacting member benefits and competitive positioning in the Medicare Advantage market. Elevance argues that using the same recalibration for its ratings could result in an additional $115 million in Quality Bonus Payments (QBP), influencing five contracts to potentially boost ratings from 3 to 4 stars to a range of 3.5 to 4.5 stars.

Elevance asserts that CMS’s approach has resulted in an uneven playing field, disadvantaging the insurer against Clover in key markets. The lawsuit requests that CMS apply the same recalibration standards used for Clover to ensure fairness and consistency. Elevance's challenge highlights CMS’s alleged arbitrary decision-making under the Administrative Procedure Act, spurred by CMS's refusal to re-evaluate based on Clover's precedent. The outcome could significantly influence competitive strategies and offerings in the Medicare Advantage sector.