What happened: CVS Health alleges CMS used 28 unlawful quality measures to calculate its 2027 Medicare Advantage Star Ratings, costing it more than $2 billion.
Who’s involved: CVS Health and its Aetna and Coventry subsidiaries versus HHS and CMS.
What’s at stake: More than $2 billion in quality bonus payments and rebate retention for 2028, according to the complaint.
Why it matters: The suit tests whether CMS can keep using quality measures it never put through the public rulemaking process Congress requires - an issue that affects every Medicare Advantage plan in the country.
Where it stands: Filed October 26, 2026, in the same Georgia court that struck down similar measures last year.
More than $2 billion. That is how much CVS Health says it stands to lose because the federal government scored its Medicare Advantage plans using quality measures it never properly adopted.
CVS Health and its Aetna and Coventry subsidiaries filed suit against the Department of Health and Human Services and the Centers for Medicare & Medicaid Services on October 26 in the US District Court for the Southern District of Georgia. The complaint asks the court to throw out the company's 2027 Star Ratings across 43 contracts covering approximately 7 million Medicare beneficiaries and recalculate them without the 28 measures CVS Health says are unlawful.
The filing leans heavily on a decision the same court handed down five months ago. In May 2026, the court ruled in favor of Clover Insurance Company and struck down 20 measures CMS had used to calculate Clover's 2026 Star Ratings. The court found CMS had gone beyond what the law allows and skipped the public comment process Congress requires before the agency can change the rules on how it rates health plans.
What makes the CVS Health suit pointed is its fairness argument. After the Clover ruling, CMS did what the court told it to do: it recalculated Clover's ratings. Public filings by Clover Health show the recalculation bumped Clover from 3.5 to 4.5 stars - a jump of two full tiers. Then CMS went further, the complaint alleges, voluntarily stripping those same measures from Clover's 2027 ratings even though the court order only covered 2026.
No other Medicare Advantage plan got the same treatment, the filing states. CVS Health's contracts were scored using the same measures the court had already found unlawful, and left as they were.
"CMS is implicitly conceding the legal infirmities identified by this Court," the complaint states.
The money is not abstract. Star Ratings drive how much of an insurer's savings CMS lets it keep, and whether it qualifies for a bonus payment on top. Plans rated below 3.5 stars keep 50% of their rebate. Plans between 3.5 and 4.5 stars keep 65%. Plans at 4.5 or above keep 70% - the maximum. A half-star shift can mean hundreds of millions of dollars for a large insurer.
Had CMS excluded the challenged measures, CVS Health's overall weighted average rating would have been 4.5 stars instead of 4, the complaint alleges - unlocking higher payments across its portfolio. Of all CVS Health's affected contracts, the one with the biggest single hit was Contract H3959, with an estimated loss of $361,068,250, according to the filing.
The complaint does not just challenge the process. It takes aim at the measures themselves, arguing that several do not reliably capture anything the insurer actually controls.
Take member disenrollment. CMS treats members leaving a plan as a sign the plan is not performing. But members switch for all sorts of reasons that have nothing to do with quality, the complaint alleges: premium changes, broker recommendations, or simply moving to a new area. Medication adherence measures track whether prescriptions appear in claims data, the filing states. A member who fills a prescription through a cash program, veterans' benefits, or another insurer would show up as non-adherent - even though they got their medication.
Survey-based measures capture how members feel about their plan overall, the complaint alleges, but those impressions can be shaped by a member's own health, expectations, or access to local doctors - not just what the plan did. And quality improvement measures, which carry five times the standard weight in the ratings formula, are described in the filing as recycled scores that measure year-over-year movement in other measures already counted. As the pool of underlying measures shrinks, a swing in a single measure can disproportionately move the result.
All 28 measures were adopted without public notice and comment, the complaint alleges. Twelve were also based on data sources the law does not authorize CMS to use for Star Ratings, according to the filing.
CMS has not let the Clover ruling stand unchallenged. It filed a notice of appeal to the Eleventh Circuit on July 21, 2026, according to the complaint, and has asked for fast-track briefing. Oral argument is tentatively set for mid-January 2027, and CMS has requested a decision by spring 2027.
But as of the filing date, the Clover order is still binding in this court. And Congress has not expanded CMS's authority over the Star Ratings program in the year since, the complaint notes.
CVS Health wants the court to throw out its 2027 Star Ratings for all 43 contracts, order CMS to recalculate them without the 28 challenged measures, and set its 2028 bonus payments and rebates on the corrected scores.
The case adds weight to a growing line of lawsuits over CMS's Star Ratings methodology. If CVS Health prevails, the practical reach extends well beyond one insurer's bottom line - every Medicare Advantage organization's ratings are built on the same measures.
The allegations in the complaint have not been tested, and no court has made any ruling on the merits of CVS Health's claims.
