Elevance Health Inc. (NYSE:ELV) has sued the U.S. Department of Health and Human Services (HHS) and the Centers for Medicare & Medicaid Services (CMS), alleging the agencies unlawfully applied different standards to Medicare Advantage insurers when calculating 2026 Star Ratings.
The insurer argues CMS recalculated a competitor’s ratings after a court ruling but refused to extend the same treatment to Elevance, costing the company an estimated $115 million in 2027 quality bonus payments.
Elevance Challenges CMS’s Star Ratings Decision
In a complaint filed last week, Elevance contends CMS violated a core administrative law principle requiring similarly situated parties to receive the same treatment.
The dispute centers on the Medicare Advantage Star Ratings program, which scores contracts on a five-star scale using quality, compliance, and performance measures.
Those ratings influence consumer enrollment decisions and determine whether Medicare Advantage organizations qualify for Quality Bonus Payments and higher rebate retention.
According to the complaint, the financial incentives tied to Star Ratings help insurers enhance member benefits, lower premiums, and fund quality improvement initiatives.
Company Cites Clover Court Ruling
Elevance’s lawsuit points to a recent federal court decision involving Clover Health Investments (NASDAQ:CLOV), in which the court found 20 measures used in CMS’s 2026 Star Ratings methodology unlawful.
The complaint says the court determined that 10 measures relied on data sources not authorized under the Medicare Act, while another 10 should have been adopted through notice-and-comment rulemaking but were not.
Elevance alleges CMS subsequently recalculated Clover’s 2026 Star Rating by excluding those measures, a step that Clover disclosed in a June 10 SEC filing.
Elevance Says It Was Denied Equal Treatment
The company argues the same 20 measures also affected its own 2026 Star Ratings. Had CMS applied the same methodology used for Clover, Elevance estimates its 2027 Quality Bonus Payments would have increased by approximately $115 million.
Beyond the financial impact, the complaint argues that Star Ratings directly affect Medicare beneficiaries because CMS publishes them through its My Plan Finder tool, influencing enrollment decisions and insurers’ competitive positions.
Company Seeks Matching Relief
Elevance contends there is no material distinction between its contracts and Clover’s that would justify different treatment. It argues that CMS cannot consider the methodology unlawful for one Medicare Advantage organization while treating it as valid for others.
Before filing suit, Elevance said it asked CMS leadership to recalculate its 2026 Star Ratings using the same approach applied to Clover.
After CMS denied that request, the company filed suit seeking an order requiring the agency to recalculate its ratings by excluding the same 20 measures identified in the Clover decision.
ELV Stock Price Activity: Elevance Health shares were down 0.96% at $413.89 at the time of publication on Monday. The stock is approaching its 52-week high of $427.19, according to Benzinga Pro data.
Photo: Brian A Jackson on Shutterstock.com
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