In a lawsuit filed in a Texas federal court Oct. 31, the insurer alleged CMS’ star ratings process was “fraught with statistical variance.”
On an Oct. 17 earnings call, Elevance Health CEO Gail Boudreaux said the company will see the number of members in plans rated four stars or higher decline in 2025, due to one of its larger contracts missing a four-star rating by 0.0004 of a point.
In the lawsuit, Elevance Health said its overall score for one of its contracts was 3.749565. CMS chose to round star ratings to the millionth, or sixth decimal place, a decision Elevance called “arbitrary and capricious.”
Plans must receive a star rating of four stars or higher to receive quality bonus payments from CMS.
Elevance will lose out on at least $375 million by narrowly missing the four-star cut off, the company alleged in the lawsuit.
The insurer is at least the fourth MA company to challenge its star rating in court. Humana and Blue Cross Blue Shield of Louisiana have both filed lawsuits challenging CMS’ star rating methodology.
Centene and UnitedHealthcare filed challenges, on a different basis. Both insurers took issue with the inclusion of secret shopper phone calls both insurers allege never connected to their call centers.
The average star rating for 2025 is 3.92, down from 4.07 for 2024. CMS determines cut points, or thresholds, for every measure each year. The agency said for 2025, many cut points increased, meaning plans had to perform better to get higher star ratings.
Elevance Health succeeded in challenging CMS’ star ratings methodology for 2024. In July, CMS recalculated star ratings for all Medicare Advantage plans after judges sided with Elevance and SCAN Health Plan in court.
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