A federal appeals court has ruled against Alignment Healthcare in its challenge to how CMS calculated the company’s 2025 Medicare Advantage star ratings, upholding a lower court’s decision that mostly sided with the agency.
The July 14 ruling caps a case Alignment first brought in January 2025 over the star ratings. The insurer won a partial victory the following June, when a district court ordered CMS to rescore one Arizona contract and lifted it from 3.5 to 4 stars, but the court sided with CMS on the rest that were challenged. Alignment appealed the parts of the case it lost, including its claims over how a member survey was administered.
That survey, sent to enrollees each year, is one input CMS uses to set star ratings. In September 2024, Alignment told CMS that ratings for two of its MA plans were inaccurate because some Spanish-speaking members received the survey in English rather than Spanish. Alignment said Spanish-language responses fell sharply between 2023 and 2024 and argued the drop pointed to either a sampling error that pulled in fewer Spanish-speaking members or an error in which those members were sent English surveys. Because Spanish-speaking members rated Alignment’s plans at least 10% higher than English-speaking members in the company’s internal surveys, Alignment argued the mistake pushed its scores down.
Alignment asked CMS to suppress the survey results for the two contracts or flag them as unreliable. CMS refused, saying the sample was random and that its vendor had followed protocol. The agency also said how the surveys were administered was up to the plan and its vendor, not CMS.
In its appeal, Alignment argued the agency acted arbitrarily, treated it differently from other insurers, and improperly left key decisions to its vendor. The panel rejected each argument, finding the company had not shown the vendor ignored its request or that CMS acted unreasonably.
The ruling is the latest turn in a broad wave of insurer litigation over MA star ratings, which determine the quality bonus payments plans receive and can be worth hundreds of millions of dollars each year. BCBS Louisiana recently lost its own 2025 ratings appeal, with the D.C. Circuit upholding a ruling that CMS acted within its authority after the insurer consolidated two contracts.
The fight has since expanded to the 2026 ratings as well. After Clover Health won a May ruling that CMS improperly used certain measures, the agency voluntarily recalculated 2027 quality bonus payments but declined to apply Clover’s approach across the industry. Since then, new challenges have been filed by Elevance, SCAN Group and Alignment, each arguing CMS should have recalculated their ratings the same way it did Clover’s.
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