UnitedHealthcare has prevailed in its lawsuit against CMS regarding the methodology used to calculate its 2025 Medicare Advantage star ratings.
The lawsuit, filed Sept. 30 in the U.S. District Court for the Eastern District of Texas, revolved around the inclusion of a single disputed customer service phone call in the agency's calculations.
Judge Jeremy Kernodle ruled that CMS must "recalculate Plaintiffs' 2025 star ratings without consideration of the disputed call and shall immediately publish the recalculated star ratings." The court found that CMS had acted "contrary to its own guidelines" when evaluating the phone call, which was marked as "unsuccessful" despite evidence showing it lasted over eight minutes and connected to a call center representative.
"In evaluating the call here, CMS acted contrary to its own guidelines. The record evidence demonstrates that the call 'connected,' the call lasted more than eight minutes, and the test caller never asked the introductory question contemplated at phase three of the call," Judge Kernodle wrote. He further declared CMS' actions "arbitrary and capricious" under the Administrative Procedure Act.
The court ordered CMS to strike the phone call from its metrics and immediately recalculate and republish UnitedHealth's star ratings in the Medicare Plan Finder.
UnitedHealthcare's lawsuit is one of several filed by insurers challenging CMS' 2025 Medicare Advantage star ratings. The agency reported a significant drop in five-star plans for 2025, with only seven achieving the top rating, compared to 38 in 2024. The average star rating also fell from 4.07 in 2024 to 3.92 for 2025.
Medicare Advantage star ratings influence consumer choice and bonus payments to insurers. Plans are rated on clinical quality, customer service, and access metrics, with even minor adjustments having significant financial implications.
Humana, Centene, Elevance Health, and BCBS Louisiana have all raised legal challenges about the methodology CMS employed for the 2025 ratings. Some of these challenges have centered on the agency's use of "secret shopper" phone calls to assess customer service metrics.
In its lawsuit, Centene claimed that the inclusion of one such call cost it $73 million in bonus payments.
UnitedHealthcare alleged disparate treatment compared to Elevance Health, which also disputed a secret shopper call in 2024. Elevance's lawsuit resulted in a recalculation of its star ratings, a precedent UnitedHealthcare referenced in its case.
On Nov. 13, Deputy CMS Administrator Dr. Meena Seshamani announced that call center measures will carry less weight in future Medicare Advantage star ratings starting in 2026.
"We have already put in place that [call centers] will have a smaller weighting on star ratings moving forward," Dr. Seshamani said at the Milken Institute Future of Health Summit.
Elevance Health and SCAN Group succeeded in challenging CMS' star ratings methodology for 2024. In July, CMS recalculated star ratings for all Medicare Advantage plans after judges sided with the health plans in court, resulting in $1.4 billion in payments to 60 health plans covering more than a million people.