Another insurer sues CMS over star ratings, citing contractor error

Another Medicare Advantage (MA) insurer is suing the Centers for Medicare & Medicaid Services (CMS) over its controversial star ratings. Alignment Health is accusing CMS of using arbitrarily biased criteria for calculating ratings, which resulted in a lower-than-expected score for its health plans. Specifically, Alignment is challenging a technical rule that eliminates high scores seen as outliers, effectively preventing insurers from receiving higher scores.

The Tukey Outlier Deletion Rule, finalized in 2020, was used to calculate ratings for MA plans. According to a CMS fact sheet, the rule is in place to “improve predictability and stability in the Star Ratings.”

“Tukey outlier deletion involves removing outlier contract scores prior to applying mean resampling within the hierarchical clustering algorithm to determine measure-level cut points,” the fact sheet states.

Alignment argues that, while the practice may prevent heavy fluctuations year to year, it is “based on objectively bad data science, and it produces arbitrary and capricious results.”

Beyond challenging the criteria, Alignment claims its ratings were calculated incorrectly due to a sampling error from CMS, which conducts the surveys of members. Alignment claims its Spanish-speaking clients were underrepresented, as CMS sent the surveys in English.

Many of the calls and surveys sent out by CMS are done by contractors, which Alignment argues violates its constitutional rights, as it is effectively being regulated by a private company rather than the agency.