Elevance Health notched a partial win in the insurer's legal fight over the methodology used to calculate the star ratings for Medicare Advantage plans.
A federal court in the District of Columbia agreed that the ratings for Blue Cross Blue Shield of Georgia, one of Elevance's subsidiaries, should be set aside as the Centers for Medicare & Medicaid Services (CMS) did not follow administrative rules in calculating the star ratings for 2024.
However, the court did stop short of saying that star ratings for all of Elevance's plans or other insurers should be tossed as well. Instead, the judge determined that CMS is "free to decide" whether other insurers should have their star ratings updated, and other payers are free to pursue legal action to secure changes.
"The only competing consideration, which neither party addresses, is whether and how a remedy that is limited to Elevance—and, more precisely, to BCBS of Georgia—might affect third parties," the court wrote. "That concern is potentially significant, moreover, because star ratings allow healthcare consumers to compare the quality of MA plans, and an adjustment that affects one (or perhaps two...) MA plans could skew the star rating system more generally."
Elevance filed suit to challenge the star ratings in early January after executives said on the company's third-quarter 2023 earnings call that it expected to take a $500 million hit to bonus payments as part of a decline in its star ratings performance for the coming plan year.
CMS rolled out significant changes to the methodology used to calculate the star ratings, which drove down a number of payers' scores. Central is the Tukey outlier provision, which CMS uses to eliminate outlier scores. It was set to kick in for 2024, but language around the Tukey changes were removed from 2022 rulemaking.
The wording was added back in for 2023 regulations, and CMS said it was deleted due to an error.
District of Columbia federal courts also sided with SCAN Health Plan over the star ratings last week. SCAN CEO Sachin Jain, M.D., told Fierce Healthcare that the sudden decline in star scores for the insurer led to a $250 million loss in bonus payments, and the fact that it could have such a broad impact in a single year suggests that regulators should go back to the drawing board on the star ratings.