Alignment Healthcare is the latest Medicare Advantage (MA) insurer to accuse the Centers for Medicare & Medicaid Services (CMS) of wrongly calculating the company’s star rating scores.
The plaintiffs are challenging the Tukey Outlier Deletion Rule, a technical calculation from the CMS that removes high-performing outliers from the raw data and pushes cutpoints higher, making strong scores more difficult to obtain. The CMS does this to prevent large, yearly fluctuations to scores.
“But as Alignment explained in its comments at the time, the rule is based on objectively bad data science, and it produces arbitrary and capricious results,” the company argued in the suit, demanding a recalculation.
Alignment further alleged its ratings were calculated incorrectly. Two Alignment contracts had a lower response rate from Spanish-language Consumer Assessment of Healthcare Providers and Systems surveys. The plaintiffs claim this is because of a CMS-inflicted sampling error or members were sent surveys in English rather than Spanish, which would be the mistake of the CMS. Alignment also disagreed with decisions made by Maximus, an Independent Review Entity.
Additionally, Alignment argues the CMS’ claims appeals process wrongly classified one of its appeals, resulting in a two-star drop on one measure from five stars to three stars. The CMS also wrongfully overturned a claim denial, Alignment said.
The company blames Maximus for many of its criticisms and believes the contractor should not play a big role in these calculations because it has been given an unconstitutional delegation of regulatory authority from the CMS.
The CMS is on the back foot in recent star ratings cases, as pointed out by Alignment in the lawsuit.
UnitedHealth Group and Centene received improved 2025 star ratings scores, reported numerous news publications, following lawsuits last fall. Humana filed its own lawsuit in October, as did Blue Cross Blue Shield of Louisiana, reported Bloomberg.
Most recently, Blue Cross and Blue Shield of Florida alleged the federal government did not fairly factor in extreme weather hitting the state when calculating its scores.
It’s not the first year the CMS has faced backlash over star ratings calculations, which have a substantial impact on a health plan’s financial prospects for upcoming years. In June, the CMS announced it would rework the program’s quality ratings for the 2024 plan year after SCAN Health Plan and Elevance Health won lawsuits against the agency.
Star ratings are a contentious issue for health plans, in part because the system is designed to be difficult for top scores. Star ratings dipped for the third consecutive year in October, and the CMS estimated in its recent MA advance notice bonus payments to insurers from star ratings decreased by 0.69%.
Editor's Note: This story has been updated to correctly characterize Maximus.