What happened: Elevance Health alleges CMS used 11 unlawfully adopted measures to calculate its 2027 Medicare Advantage star ratings, depressing scores across 12 contracts
Who's involved: Elevance Health (plaintiff) v. CMS and HHS (defendants)
What's at stake: approximately $516 million in 2028 quality bonus payments and rebate retention
Why it matters: if CMS can change payment-linked measures without formal rulemaking, every MA plan's revenue is exposed to shifting standards
Where it stands: complaint filed November 6, 2026; no court ruling yet
CMS quietly stripped flawed measures from one insurer's 2027 star ratings. Elevance Health says CMS used those same measures to grade everyone else - and that the difference is worth $516 million.
The health insurer filed a complaint in the US District Court for the District of Columbia on November 6, alleging CMS relied on 11 measures that were never adopted through the formal rulemaking process Congress requires. CMS used those measures when it published 2027 Medicare Advantage star ratings on October 8, the complaint states.
According to the filing, those measures pulled down the ratings on 12 Elevance contracts serving members in New Jersey, Ohio, Puerto Rico, California, Virginia, Florida, Tennessee, New York and Texas, as well as one contract that serves members nationally. The complaint alleges the correct ratings - calculated without the disputed measures - would raise every one of those contracts by at least half a star.
Half a star might sound small. It is not.
In the Medicare Advantage system, the gap between a 3.5-star and a 4-star rating determines whether an insurer qualifies for quality bonus payments - additional federal funding that helps plans offer better benefits, lower premiums and reduced out-of-pocket costs for members. Elevance projects that correcting its ratings would unlock approximately $516 million in 2028 bonus payments and rebate retention across the 12 contracts, according to the complaint.
Here is how the money works: each year, Medicare Advantage plans submit bids to CMS. When a bid comes in below a benchmark CMS sets, the difference creates a rebate that the insurer can use to fund extras like vision and dental coverage or cut member costs. The share of that rebate a plan keeps depends on its star rating. Plans below 3.5 stars keep 50%. Plans at 3.5 but below 4.5 keep 65%. Plans at 4.5 or above keep 70%.
Several of Elevance's contracts would cross the 4-star threshold if CMS recalculated without the disputed measures, the complaint alleges - moving them from no bonus payment to full bonus eligibility.
The legal arguments are not new. In May 2026, a federal court in Georgia ruled in Clover Insurance Co. v. HHS that parts of CMS's star ratings methodology were unlawful. The court found that CMS had used measures it never put through the formal rulemaking process Congress requires for any rule that affects Medicare payments. The court ordered CMS to recalculate Clover's ratings without the defective measures.
CMS complied - and then went further. According to Elevance's complaint, CMS voluntarily removed the same defective measures from Clover's 2027 star ratings, even though the Georgia court's order only covered 2026. But when CMS published Elevance's 2027 ratings on October 8, it kept all 11 challenged measures in the calculation.
The complaint reads this as a telling move: if the measures were lawful, the filing states, CMS would have had no reason to strip them from Clover's 2027 ratings.
The complaint identifies two issues. First, all 11 measures - covering areas from colorectal cancer screening and flu vaccination rates to medication adherence and customer service - were introduced or changed through annual technical guidance rather than through formal rulemaking. Federal law requires CMS to go through that process before setting or changing any standard tied to Medicare payments, the complaint states, citing the Supreme Court's 2019 decision in Azar v. Allina Health Services.
Second, two of those measures - D08 (medication adherence for diabetes medications) and D10 (medication adherence for statins) - drew on Part D prescription drug event data. The complaint alleges this data sits outside the three measurement systems Congress designated as the only permissible sources for star ratings: HEDIS for clinical quality, the Health Outcomes Survey for health outcomes, and CAHPS for member experience.
The complaint asks the court to throw out the 2027 star ratings for all 12 contracts listed in its Exhibit A, order CMS to recalculate them without the 11 challenged measures, and direct CMS to set 2028 bonus payments and rebates based on the corrected ratings.
The filing also points to competitive harm beyond the dollar figure. CMS publishes star ratings through its Medicare Plan Finder tool, where members and brokers compare plans during enrollment. Brokers and marketing organizations may refuse to promote plans rated below four stars, the complaint states, and employers offering Medicare Advantage to retirees often treat star ratings as a shorthand for quality. An artificially low rating, the filing argues, misleads the people the system is designed to inform.
This is Elevance's second star ratings challenge against CMS in five months. The insurer filed an earlier action in July 2026 disputing the agency's refusal to recalculate its 2026 ratings on the same terms applied to Clover. The new complaint targets the 2027 ratings with a narrower set of 11 measures, filed in a different court.
For MA plan sponsors, brokers and compliance teams watching the growing wave of star ratings litigation, the core question is simple: if CMS's methodology fails when applied to one insurer, does it hold up when applied to the rest?
The allegations have not been tested, and no court has ruled on the merits.
