Star Ratings Litigation Update: Where the SY 2026 and SY 2027 Cases Stand

Shortly after CMS released Star Year (SY) 2027 results, new lawsuits challenged how the agency calculated them. Some of the claims relate to the favorable treatment Clover Health received again. This update summarizes where the SY 2026 and SY 2027 cases stand.

Current cases

Four plans filed SY 2026 measure lawsuits: Clover, Elevance, Scan, and Alignment. Three plans have filed SY 2027 lawsuits: Alignment, Healthfirst, and Centene. Alignment and Centene filed in the same Georgia federal district as Clover. Healthfirst filed in a New York district court.

SY 2026 cases

Clover: CMS appeal. CMS filed its appeal in late July, and Clover has not yet responded. The Georgia district judge found that ten measures lacked statutory authority and ten others failed regulatory disclosure requirements. CMS makes four arguments on appeal:

• Venue: The case was filed in an improper venue.
• "Services" versus "benefits": The district court treated bonus payments to Medicare Advantage (MA) insurers as "payment for services." CMS says "services" means medical care from hospitals and providers, while "benefits" means insurance coverage. It argues Star Ratings affect insurer bonuses, not provider payments.
• "Based on": CMS says "based on" does not mean "based exclusively on," and that the district court's reading conflicts with Eleventh Circuit and Supreme Court precedent.
• Remedy: The court ordered a recalculation that set aside only the measures where Clover scored poorly. CMS argues the measures where Clover scored well were equally flawed under the court's reasoning, so the remedy is inequitable and inconsistent with the regulatory harmless-error standard.

In my view, all four arguments are a stretch.

Elevance. The court denied Elevance's request for a temporary injunction, which is a very high bar. Elevance has since filed an amended complaint and a motion for summary judgment, and CMS has responded. Elevance argues that some of its SY 2026 contracts deserve the same treatment as Clover's and that the court should remove the same 20 measures. CMS argues the court should wait for the appeal and that Clover is likely to be reversed.

Scan and Alignment. These two cases are nearly identical. They are in a Washington, D.C. district court and are at the summary judgment stage. Both plans argue that CMS's recalculation removed ten of the measures the Clover judge found deficient but left ten others in place. They say those ten measures were never adopted through regulation, as required for issues that govern payment for services, eligibility, or scope of benefits. They want a quick decision because the 2027 payment year begins soon. CMS repeats many of its Clover arguments and says any relief should be a plain remand. It also argues that removing only the plaintiffs' "handpicked" measures would be inequitable and misleading to consumers.

SY 2027 cases

Alignment. Alignment filed suit the day after the Stars announcement, in the same D.C. federal court that is hearing its SY 2026 case. The complaint makes similar arguments, in stronger terms, and again says CMS used the same ten measures without adopting their specifications through regulation. Alignment reports that only 25% of its members would be in plans rated 4 stars or higher for 2027, down from 100% in 2026. It asked CMS on October 6 to redetermine its ratings without the ten measures, and CMS denied the request on October 7, one day before ratings were released. The complaint alleges four contracts were wrongly rated, with more than $200 million in lost payments plus reputational and competitive harm. Alignment asks the court to vacate the ratings and direct CMS to recalculate them.

Healthfirst. Healthfirst of NY filed on October 19. Its arguments resemble Alignment's and Scan's, but it challenges only five measures. CMS declined its request for a recalculation. Healthfirst estimates the lower ratings will cost more than $380 million in 2028 payment year rebates and quality bonuses, and it also asks the court to vacate the ratings and order a recalculation.

Centene. Centene alleges that CMS violated the Administrative Procedure Act (APA) by relying on 17 measures that run afoul of "core statutory safeguards." Centene says its enrollment in plans rated 4 stars or higher fell from 18% to 9%, costing it $448 million in quality bonus payments for payment year 2028. Its suit parallels Clover's, with three fewer measures. Centene also argues that CMS applied a different calculation to Clover in both 2026 and 2027, which it says shows CMS accepts that its methodology is flawed.

How the cases compare

Every case argues that CMS violated statutes or regulations in the measure set used to rate plans. Each plan asks to remove a different set of measures.

What to watch

I expect more SY 2027 lawsuits, and I understand why plans are defending their interests. About 35 million people rely on MA for coverage, and the program already faces uncertainty from rates and other variables. CMS and Congress will need to address the underlying issues in the Stars program to reduce further litigation.

I expect CMS to include fixes in the 2028 regulatory rule, which should appear in draft form in November. Those changes are unlikely to resolve every issue, and Congress may need to weigh in as well. Quality leaders at MA plans should follow the Clover appeal and the November proposed rule closely, since both could affect how future Star Ratings are calculated.

Want the full analysis? Read Marc's original article on Healthcare Labyrinth.