The Trump administration will appeal a Georgia court ruling that triggered a broad recalculation of insurers' Medicare Advantage star rating scores for 2026.
In court documents filed Tuesday, federal agencies said they would appeal the ruling to the Eleventh Circuit Court of Appeals. In late May, a judge in Georgia's Southern District Court came down in favor of Clover Health, tossing 20 measures that the Centers for Medicare & Medicaid Services used to calculate its scores.
The court cut 10 of those measures, as the judge determined CMS exceeded its statutory authority in the data sources used, while the remaining 10 were rejected because the court ruled CMS did not meet its rulemaking and comment requirements to use them.
The ruling also triggered several follow-up lawsuits from other payers over the calculations, including Elevance Health, Alignment Healthcare and SCAN Health Plan.
Erica Socker, Ph.D., research professor and co-director of the Medicare Policy Initiative at Georgetown’s Center on Health Insurance Reform, told Fierce Healthcare that the Clover case stands out from other star ratings litigation as it directly challenges CMS' statutory authority.
For example, Humana sued the feds in October 2024 over it star ratings scores, which saw a significant decline that year. The company pegged that decline to three test calls, and the case is ongoing.
"The other litigation previously on stars has really been about these methodological things and very plan-specific things," Socker said.
The implications of the Clover ruling, however, are far broader. Katie Keith, director of the Health Policy and the Law Initiative at the O’Neill Institute for National and Global Health Law at the Georgetown University Law Center, said an appeal was a "no-brainer" from a federal perspective.
An appeal, she said, shapes how they can respond to the other insurer challenges. The Elevance case, for instance, is on an accelerated timeline, so federal agencies must respond by Aug. 4.
There is also substantial amounts of money at stake. CMS' approach for the recalculations didn't follow the Georgia ruling to a T, so Elevance, Alignment and SCAN want to see their scores updated to reflect the methodology used for Clover.
Elevance said if CMS did so, it would see $115 million more in quality bonus payments, while Alignment said its payments would increase by $50 million.
"It's a natural candidate for them to fight," Keith said.
In addition, health plans that haven't sued already will be watching the proceedings closely to see what their own next steps may be. If the government loses on appeal, further litigation is almost certain to follow, Keith said.
CMS often wins lawsuits tied to more plan-specific issues, but plans have been on a winning streak with more aggressive challenges that have led to the most recent recalculations as well as an update to scores in 2024, she said.
"I feel like [Medicare Advantage organizations] will get really creative about bringing similar challenges to other measures that they want to try to knock out too, so I don't think this is the end of the story either by any stretch of the imagination," she said.
"These companies seem to have the stomach for it and have been quite aggressive about going to court," Keith added.
Criticism of the star rating program as it stands today isn't new, either. Payments have ballooned over the past decade, and the Medicare Payment Advisory Commission estimates 2026 payments to be about $22 billion.
Quality bonus payments in Medicare Advantage were tied to the stars through the Affordable Care Act, so there are some who argue in favor of delinking the scores from payment entirely, Socker said. There is also research that questions whether the ratings reflect actual quality improvements in the plans, she said.
Other reforms on the table include a recommendation from MedPAC that the stars program shift to a budget-neutral model, which would align in with quality bonus programs in traditional Medicare, she said.
Socker said that if the Clover decision carries forward, it will be very difficult for regulators "to get back to a meaningful quality bonus program."
"The concerns about whether the measures are meaningful and it's doing what you'd want it to be doing, those existed even before this," she said. "So I think this adds additional rationale and motivation to potentially be rethinking it in a more major way."