Federal Judge Rejects Elevance Health's Challenge to Medicare Star Ratings

A federal judge in Texas has ruled against Elevance Health's lawsuit challenging the U.S. Department of Health and Human Services' (HHS) methodology for calculating Medicare Advantage star ratings. Elevance Health contended that an improper rounding down of its star rating score cost it a higher rating tier, potentially affecting bonus payments valued at $375 million. The judge determined that Elevance failed to demonstrate significant errors in the calculations and that the complexity of the rating system limited judicial review. Medicare Advantage plans, such as those offered by Elevance's subsidiaries Anthem Blue Cross and Blue Shield and Carelon, receive star ratings from the Centers for Medicare & Medicaid Services (CMS) ranging from one to five stars. These ratings influence government bonus payments that reward plans for maintaining costs below designated targets. Elevance's lawsuit focused on a contract that received a 3.749565 score, which CMS rounded to 3.5 stars instead of rounding up to 4 stars as Elevance argued it should have. HHS defended that its rounding process complies with regulations and warned that permitting such challenges could lead to frequent litigation from insurers narrowly missing higher tiers. This ruling follows a similar recent dismissal of Humana's legal challenge to reduced star ratings due to procedural shortcomings. The outcomes underscore ongoing legal scrutiny affecting healthcare payers' star ratings and the critical regulatory pathways insurers must navigate to dispute CMS assessments.