CMS is facing at least a half-dozen lawsuits over its 2025 Medicare Advantage star ratings.
Alignment Healthcare is the latest MA insurer to sue CMS, alleging it acted wrongfully when assigning 2025 star ratings. In a complaint filed Jan. 10 in federal court in Washington, D.C., attorneys for the insurer alleged CMS and its contractors made "significant mistakes" in their handling of Alignment's MA star ratings.
The MA insurer also slammed the agency's application of the Tukey outlier deletion rule, a statistical method meant to eliminate extreme outliers from data sets. Alignment attorneys argued the rule is "based on objectively bad data science, and it produces arbitrary and capricious results."
At least five other insurers have challenged their star ratings for 2025, on varying grounds. In December, Florida Blue filed a lawsuit alleging the agency did not fairly account for the impact of natural disasters on its access-to-care measures.
Humana and BCBS Louisiana also have pending court challenges to their respective 2025 star ratings.
Two insurers, UnitedHealthcare and Centene, successfully challenged their 2025 star ratings. Both companies alleged "secret shopper" phone calls that never connected to call centers were wrongfully included in their ratings. The agency later revised star ratings for several UnitedHealthcare and Centene MA contracts.
Average Medicare Advantage star ratings have declined each year since 2022, when the average star rating was 4.37. The average rating in 2025 is 3.92.
For 2025, many cut points increased, meaning plans had to perform better to get higher star ratings. According to CMS, several factors accounted for the tougher cut points, including the removal of extreme outliers, and the return of some measures to pre-pandemic levels.
For 2026, CMS estimated plans will see a small 0.69% decline in bonus payments, from lowered star ratings, according to an advance notice published Jan. 13.
Star ratings determine the quality bonus payments plans receive from the federal government. Plans with ratings of four stars or higher receive bonus payments.
The series of lawsuits come after two insurers also successfully challenged their 2024 star ratings. SCAN Group and Elevance Health both challenged CMS implementation of the Tukey outlier method. Judges ruled the agency violated the Administrative Procedure Act in its implementation of the new methodology.
CMS recalculated star ratings for every Medicare Advantage contract following the decisions.