What's Happening?
The Centers for Medicare & Medicaid Services (CMS) is set to recalculate the 2026 Medicare Advantage star ratings following a court ruling in favor of Clover Health. A federal judge found that CMS improperly used 20 metrics in calculating Clover Health's
scores, as 10 of these measures lacked the necessary notice-and-comment period. This decision has significant implications for the Medicare Advantage program, as it may lead to changes in how star ratings are calculated across the industry. The recalculation is expected to lower average scores for some payers, while potentially increasing scores for Clover Health. The ruling could also prompt other insurers to pursue legal action against CMS over similar issues.
Why It's Important?
The recalibration of Medicare Advantage star ratings could have widespread effects on the healthcare industry, particularly for insurers participating in the program. Star ratings influence reimbursement rates and consumer choice, making them a critical factor in the financial performance of Medicare Advantage plans. The court's decision underscores the importance of adhering to procedural requirements in regulatory processes, which could lead to increased scrutiny and potential legal challenges from other insurers. The recalculation may also align with broader efforts to streamline the star ratings system, a goal associated with the Trump administration's healthcare policies. This development highlights the ongoing complexities and legal challenges within the Medicare Advantage program.
What's Next?
CMS has announced that it will only adjust scores if it results in an increase for a plan's rating. Insurers have until June 29 to decide whether to resubmit bids for the 2027 plan year based on the recalculated scores. The recalculation process may lead to further legal challenges from insurers dissatisfied with their new ratings. Additionally, CMS may consider appealing the court's decision or seeking legislative changes to address the procedural issues identified by the court. The outcome of these actions could influence future regulatory practices and the stability of the Medicare Advantage program.
