Elevance Health filed suit against the Centers for Medicare and Medicaid Services, challenging the agency's refusal to recalculate the company's 2026 Medicare Advantage Star Ratings using methodology that CMS applied to rival Clover Health following a court order.
The lawsuit centers on equal treatment under administrative law. Elevance contends that CMS engaged in arbitrary and capricious decision-making by recalculating Clover Health's Star Ratings following a judicial determination but declining to apply the same recalculation methodology to Elevance despite allegedly identical circumstances warranting such relief.
Star Ratings directly impact Medicare Advantage insurers' finances and market position. CMS uses the five-star quality rating system to determine bonus payments to high-performing plans and to guide beneficiary plan selection. Lower ratings reduce an insurer's competitive standing and revenue from quality incentive payments. The 2026 ratings significantly affect plan viability and profitability in the coming contract year.
Elevance alleges that CMS's differential treatment violates the Administrative Procedure Act, which requires agencies to apply rules consistently and to provide reasoned explanations for their policy choices. The company argues that once CMS determined that recalculation was appropriate for Clover Health, legal and equitable principles required identical treatment for similarly situated insurers facing the same data or methodological defects.
The suit targets what Elevance frames as selective agency action. If Clover Health's ratings warranted judicial or administrative correction, Elevance's position holds that consistent agency practice demands the same correction apply to Elevance absent legally cognizable distinctions between the two situations.
This dispute reflects ongoing tension between CMS and Medicare Advantage insurers over rating accuracy and agency transparency. Both companies operate nationwide MA plans and compete in overlapping markets. The Star Ratings directly influence which plans beneficiaries select and how