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, resulting 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.

CMS on the defensive

Courts have been sympathetic to cases challenging the legitimacy of CMS’s star rating system for MA plans. Last November, UnitedHealth Group successfully sued CMS, prompting a federal judge to order the recalculation of the insurer’s 2025 MA star ratings, which had been downgraded due to a disputed phone call.

The judge sided with UnitedHealth, finding that CMS violated procedural rules and improperly allowed third-party contractors to influence ratings.

Alignment’s lawsuit could benefit from this precedent. However, the outcome remains to be seen.

Chad Van Alstin Health Imaging Health Exec

Chad is an award-winning writer and editor with over 15 years of experience working in media. He has a decade-long professional background in healthcare, working as a writer and in public relations.

Around the web

A string of executive orders from the White House created serious concerns among radiologists and other healthcare providers throughout the United States. The American College of Radiology issued a statement to help guide its members through the chaos. 

Bridgefield Capital, founded in 2015, has previously invested in such popular brands as Cirque Du Soleil, Del Monte and Quiksilver. This transaction is expected to be completed in the second half of 2025. 

Given the precarious excitement of the moment—or is it exciting precarity?—policymakers and healthcare leaders must set directives guiding not only what to do with AI but also when to do it.