CMS appeals court ruling on Medicare Advantage star rating methodology as insurers file lawsuits
The court battles over the fairness of the Medicare Advantage Star Rating program continue to pile up. A week after multiple insurers filed lawsuits against the Centers for Medicare & Medicaid Services (CMS) to force a recalculation of grades given to health plans, the agency has filed an appeal to the court decision that triggered the avalanche of litigation.
CMS filed a formal appeal on Tuesday, which challenges the ruling by a U.S. District Court in Georgia, where a judge sided with plaintiff Clover Health, a healthcare payer that had taken issue with certain metrics used in the star rating for its Medicare Part C plans.
In the end, the court ruled that 20 of the metrics CMS used to apply its ratings were invalid for one reason or another, mostly related to challenges in measuring or applying them consistently, thus they could not be used to give ratings to payer plans.
Of the 20 metrics, the court threw 10 out entirely but made room for CMS to tweak the other 10 in the future. Categories the agency uses to rate plans include customer service reliability, the speed of reimbursement for patient care, and more, in an attempt to measure the value of privatized Medicare plans.
The higher the star rating, the more incentive payments companies earn, and even a half-star reduction can mean the difference of hundreds of millions of dollars.
Following the ruling in Georgia, CMS complied with the court decision by reevaluating Clover Health’s plans, eliminating the 20 metrics that were struck down by the court. In the end, star ratings were raised from 3.5 to 4.
This caught the eye of Elevance Health. In a lawsuit filed in early July, the insurer argues that its plans were downgraded using the same methodology and should receive the same favorable recalculation as Clover Health.
The dispute could be worth $115 million to Elevance in additional bonus payments tied to Medicare Advantage star ratings. The insurer is asking a judge to require CMS to apply the same methodology to its plans, arguing that the agency cannot give Clover a more favorable recalculation while denying the same treatment to other insurers affected by the invalidated metrics.
Soon after, two more Medicare Advantage insurers, SCAN Health Plan and Alignment Healthcare, sued CMS over the agency’s handling of its star ratings, making demands similar to those seen in the Elevance lawsuit. The insurers argue their plans were also hurt by the methodology and should receive the same re-evaluation.
The financial stakes are significant: SCAN says it could be missing out on $125 million in bonus payments, while Alignment estimates its losses at $50 million.
The insurers say CMS refused to recalculate their ratings despite doing so for Clover Health, which they argue violates the Administrative Procedure Act and the court’s ruling. SCAN and Alignment are seeking to force CMS to apply the same methodology used for Clover, although it remains unclear whether the related lawsuits will ultimately be consolidated.
For now, with the CMS appeal, they may also be on hold. A court has yet to rule on any of the above, as this is a developing story.
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.