Clover Health, a Medicare Advantage carrier, recently won its lawsuit against the Centers for Medicare and Medicaid Services. As a result, every plan in the nation is having its Star Ratings recalculated – just before final bids for Contract Year 2027 are due. What happened, and more importantly, what does it mean? We’ll dive right in.
In the fall of 2025, Clover brought suit against CMS, claiming its 3.5 Star Rating was lower than the 4-star rating it deserved. That sounds pretty run-of-the-mill on its face. Carriers sue over that all the time.
The bigger issue? Clover shared five legal theories claiming that over half of all Star Ratings measures were improperly included in its calculations. And if not for these improper measures, the plans would have been scored higher.
At stake: millions of dollars in Star Ratings bonus payments. Only plans earning 4 stars or greater are eligible.
Those bonus dollars are often used to fund many Medicare Advantage benefits: Part B Givebacks, lower copays, dental/vision/hearing benefits, gym memberships – you name it.
And so, the industry awaited the court’s decision with bated breath.
The U.S. District Court for the Southern District of Georgia agreed in part with Clover’s arguments. 20 Star Rating measures were excluded from Clover’s calculations.
In short, the court said CMS exceeded its statutory authority when it implemented measures related to prescription drug event data, call center monitoring, contractor-generated data, and Part D authority. Instead, CMS must only use quality measures outlined in law: specifically, those embedded in the Healthcare Effectiveness Data and Information Set, the Medicare Health Outcomes Survey, and the Consumer Assessment of Healthcare Providers and Systems.
Separately, the court also held that CMS did not follow notice-and-comment procedures when implementing Star Rating measures related to improving mental health, reducing falling, getting needed care, and the annual flu vaccine, among others. Because Star Ratings effectively impact payments and rebates plans receive from CMS, the public is entitled to comment on changes in such policies before they go into effect. Because CMS did not follow those procedures for these specific measures, they were found to be improperly implemented.
The court ordered CMS to set aside Clover’s 2026 Star Rating and recalculate it. The order did not direct CMS to change it to a four star rating, nor was the agency required to recalculate Star Ratings for any other plan.
While CMS will likely appeal the decision, it can only play with the cards currently in its hand. In what appears to be an attempt to ward off future litigation, CMS stated it would recalculate Star Ratings for every Medicare Advantage Plan. However, in its statement, it noted plans would be held harmless: the agency would only count the better of a plan’s two scores after recalculation.
Plans had through June 29, 2026, to submit new bids with these new ratings taken into account.
And that’s a pretty big deal.
Since Star Ratings can only go up, it is very likely more plans will be rated four stars or higher. And if more plans are rated four stars or higher, there will be a lot more Quality Bonus Payment dollars injected into the system.
By law, 100% of these bonus payments have to go back to plan enrollees.
And so, instead of the steady erosion of both core and supplemental benefits we have seen over the past several years, there may be an attempt to stanch some of the bleeding. That could come in the form of slight hikes to annual dental maximums that have taken a hit in recent years, lower copays or coinsurance for office visits, decreased premiums, or increased Part B rebates.
We won’t know the final details until plans are released, of course. But there is a very good reason to be cautiously optimistic about CY2027 plan designs.