University health plan sues CMS, citing $43M in expected losses over Medicare Advantage star ratings drop
Fallout from a federal court decision over the summer that sided with medical insurer Clover Health in a dispute with the Centers for Medicare & Medicaid Services (CMS) is continuing to make waves, with numerous insurers now filing their own complaints, challenging the agency’s 2027 star ratings for their Medicare Advantage plans.
The latest to file a lawsuit is Jefferson Health Plans, which operates through Thomas Jefferson University. The group claims in its court filing, submitted Wednesday to a U.S. District Court for the District of Columbia, that it stands to lose $43 million as a result of lower-than-expected star ratings being issued to its Medicare Part C plans.
Those losses come in the form of a reduction in quality incentive payments, which CMS pays to plans on a tiered scale based on their star ratings, from 1 to 5.
Star ratings are issued based on numerous criteria, including customer service response time, the speed of reimbursement for services, and more, aimed at providing a guide to consumers as they look for privatized Medicare options as an alternative to the traditional government-run program.
“The harm suffered is not only financial, but reputational and competitive,” Jefferson wrote in its court filing. The insurer went on to add that it is not challenging the existence of the star rating initiative, but instead is taking issue with certain metrics CMS is using when issuing grades.
This directly relates to the decision a U.S. District Court in Georgia made when siding with Clover Health. In that lawsuit, a judge tossed 10 metrics used by CMS entirely and ruled that another 10 could not be used to grade the plans of Clover Health, as the agency needed to rework the criteria to ensure it could be applied fairly to all insurers.
CMS appealed the decision shortly after the ruling was made, but it did comply with the order to re-grade Clover Health plans using the eliminated criteria.
Avalanche of litigation followed October release
In October, CMS released its 2027 star ratings for Medicare Part C and D plans, and since then at least 9 other insurance companies, not counting Jefferson, have filed lawsuits making similar complaints over the methodology CMS is using and how it may run afoul of the ruling made in the case of Clover Health.
The latest to file a lawsuit, in late October, was CVS Health’s Aetna, which contended that 28 quality metrics used by CMS to grade its plans were unlawful. Aetna’s complaint challenged 28 quality metrics, making it the most extensive challenge of the star ratings to date.
In its complaint filed only days earlier, Centene challenged 17 CMS metrics, while a complaint filed earlier in the month by Alignment Healthcare, a payer that operates in five states, accused the agency of being more broadly “in flagrant violation” of what Congress envisioned for the Medicare Part C and D star ratings initiative.
Other lawsuits were filed shortly after the Clover Health ruling, with companies asking a court to compel CMS to re-grade all plans using the 20 metrics the judge eliminated.
Jefferson Health said ratings for two of its plans fell from 3.5 stars to 3 heading into 2027, with a third seeing a drop from 3 stars to 2.5 stars. The insurer, a relatively small regional plan operating in Pennsylvania, said in its lawsuit that the ratings changes could result in millions of dollars in losses over the next couple of years.
CMS has yet to publicly respond to any of the litigation and has not responded to HealthExec’s request for comment.
Its appeal of the Clover Health ruling is still pending.
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