Centene Corporation's Legal Challenge Against CMS Impacting Medicare Advantage Ratings
Centene Corporation is challenging the Centers for Medicare & Medicaid Services (CMS) for allegedly implementing unlawful quality measures that significantly impacted its 2027 Medicare Advantage Star Ratings, resulting in an estimated $448 million loss.
This legal battle, involving Centene and its 35 subsidiaries, has been taken to the U.S. District Court for the Southern District of Georgia as of October 22, 2026. At the heart of the dispute are the Medicare Advantage Star Ratings, which determine the level of government payments to insurance plans. High-star plans gain bonus payments and can offer better benefits, whereas lower-rated plans face reduced payments, impacting their competitive edge. Centene insists that if the contested measures had not been applied, most of its contracts would have secured higher ratings, preventing the potential loss of bonus payments and rebates.
Impact on Medicare Advantage Plans
The Star Ratings directly influence the viability and market competitiveness of Medicare Advantage plans. A plan's rating affects not just payment levels but also its marketplace reputation. For Centene, two specific contracts are under threat, facing possible public warnings on CMS's Medicare Plan Finder, which could discourage enrollment. If these warnings persist for three years, CMS might terminate these contracts. Centene asserts that these contracts would have surpassed the critical three-star mark without the disputed quality measures.
Precedents and Implications
This legal action draws on a precedent set in May 2026 when a similar case involving Clover Insurance Company saw the court rule against CMS’s use of unauthorized measures, compelling a revision of Clover’s ratings. The court’s decision to exclude these measures from Clover's 2027 ratings, although not mandated, suggests their potential invalidity, yet they continue to be applied to other plans, including Centene's.
Centene's complaint argues that CMS's decision to revise Clover's ratings implies a recognition of the measures’ invalidity, yet they remain a part of many other plans’ evaluations. Consequently, Centene seeks to have its ratings adjusted and desires the opportunity to revise its 2028 bids to reflect accurate scores.
Market and Competitive Considerations
The Star Ratings and their public accessibility on tools like the Medicare Plan Finder significantly affect decision-makers, including patients, brokers, and employers. Centene claims that its scores have been negatively impacted, possibly inflating competitors' ratings and creating an unfair competitive landscape. The company urges judicial intervention to level the playing field and maintain fairness in Medicare Advantage offerings.
| Star Rating | Impact on Payment | Consequence |
|---|---|---|
| 4 Stars or More | Higher Payments | Bonus payments and program savings |
| Below 4 Stars | Lower Payments | Reduced competitiveness and benefits |
Next Steps and Industry Implications
Currently, these allegations await judicial review, and no court ruling has been issued. The outcome of this case could have wide-ranging implications for insurers using CMS's measures to gauge performance and quality. Industry professionals are closely watching to understand potential changes in scoring methodologies, anticipating adjustments that could influence future biddings and competitive strategy. Stakeholders, including agents, brokers, and underwriters, must prepare for possible regulatory developments that may arise from this high-stakes legal battle.