Table of Contents
CMS Challenges Court-Ordered Clover Star Ratings
The Centers for Medicare & Medicaid Services is appealing a federal court decision that required the agency to recalculate the 2026 Medicare Advantage star rating for Clover Health’s largest contract, escalating the Clover Health star ratings dispute to a higher court.
Where the Clover Health Star Ratings Appeal Stands Now
The July 21 notice moves the case to the U.S. Court of Appeals for the 11th Circuit. The one-page filing says the defendants are appealing the court’s May 29 judgment and related orders granting Clover partial summary judgment and denying the government’s request to dismiss the case.
How the Original Lawsuit Began
Clover Insurance Company, a subsidiary of Clover Health Investments, sued the Department of Health and Human Services and CMS in November after its largest Medicare Advantage contract received a 3.5-star rating.
What the Court Found Wrong With Clover Health Star Ratings Calculations
In a May 27 order, U.S. District Judge Lisa Godbey Wood found that CMS improperly included 20 measures when calculating Clover’s rating. The judge found that one group of 10 measures relied on data that the Medicare statute did not authorize CMS to use in the quality rating calculation. Those measures included medication adherence, call center performance, appeals decisions and pharmacy-related metrics.
A Second Group of Procedurally Invalid Measures
A second group of 10 measures was procedurally invalid because CMS did not adopt them through notice-and-comment rulemaking, according to the ruling. Those measures addressed annual flu vaccination, physical and mental health, fall risk, bladder control, access to care, customer service, healthcare quality and care coordination.
How the Clover Health Star Ratings Recalculation Played Out
Wood set aside Clover’s 3.5-star rating and ordered CMS to recalculate it without the disputed measures. CMS subsequently raised Clover’s rating to 4.5 stars, according to a June 9 regulatory filing. The revised rating applies to Clover’s H5141 preferred provider organization contract, which covers more than 97% of its members.
Clover’s HMO Contract Was Unaffected
Clover’s health maintenance organization contract was not part of the case and retained its 4-star rating, meaning the legal dispute and its financial implications are specific to the company’s dominant PPO contract rather than its full book of business.
Why Clover Health Star Ratings Carry Such High Financial Stakes
Medicare Advantage star ratings directly affect plan payments and competitive positioning. Contracts rated at least 4 stars qualify for quality bonus payments and can receive larger rebates that plans may use to reduce premiums or add benefits. Clover estimated in its complaint that the original 3.5-star rating would cost the company and its members approximately $120 million in 2027 quality bonuses and related payments.
Broader Context on 2026 Ratings
The 2026 ratings, released in fall 2025, will determine quality bonus payments in 2027. CMS said about 40% of Medicare Advantage prescription drug contracts earned at least 4 stars, accounting for approximately 64% of enrollment.
How the Clover Health Star Ratings Case Has Spread to Other Insurers
The Clover decision has fueled additional disputes over how CMS recalculated ratings for other Medicare Advantage organizations. Elevance Health sued CMS in July, alleging the agency gave Clover more favorable treatment and denied five Elevance contracts the same 20-measure recalculation. The insurer estimates that the difference will cost it approximately $115 million in 2027 quality bonus payments.
SCAN and Alignment Health File Similar Challenges
SCAN Health Plan and Alignment Health also filed separate lawsuits, arguing that CMS’s broader recalculation did not fully apply both parts of the Clover ruling. Each insurer is seeking to raise a contract’s rating from 4 stars to 4.5 stars. Following the Clover ruling, CMS said in June it would voluntarily recalculate 2027 quality bonus payment ratings for certain Medicare Advantage contracts while protecting plans whose ratings would otherwise decline.
What This Means for the Future of Medicare Advantage Star Ratings
With the Clover Health star ratings dispute now before the Eleventh Circuit, and Elevance, SCAN, and Alignment Health all pursuing related claims over how CMS applied its recalculation methodology, the outcome of this appeal could shape how consistently CMS is required to apply star ratings adjustments across the broader Medicare Advantage industry. Given that CMS has already committed to voluntarily recalculating ratings for certain contracts while protecting others from declines, the resolution of this case may clarify the boundaries of that voluntary framework and whether it satisfies the legal standard set by Judge Wood’s original ruling.
For more healthcare industry updates, insights and news, visit DistilINFO. Click here to subscribe to stay informed.
