On May 27, 2026, a federal court ruled that the Centers for Medicare & Medicaid Services (CMS) unlawfully included certain quality measures in Clover Health’s 2026 Medicare Advantage (MA) Star Ratings, raising important questions for MA issuers.
In an exclusive webinar for clients, Wakely, an HMA Company, addressed the court ruling, its implications, and the resulting policy and financial issues, some of which remain unanswered.
Clover Decision Requires Careful Interpretation
The US District Court for the Southern District of Georgia ruled that CMS acted unlawfully when it incorporated certain quality measures into Clover’s Star Ratings. According to the decision, CMS relied on data sources beyond those permitted and did not follow required procedural steps, including notice and comment rulemaking. As a result of the decision, CMS was required to recalculate Clover’s 2026 Star Ratings, removing the disputed measures from the rating process.
Although the judgment applies specifically to Clover, the underlying legal reasoning raises broader questions that could affect how the Star Ratings program is administered for MA plans going forward.
Clover Decision Raises Strategy Questions for Other Plans
Wakely Consulting modeled the revenue impact of the 20 Stars measures specific to the Clover case as well as three scenarios based on the court’s ruling:
Key takeaways for MA plans include:
- The Clover decision creates a meaningful degree of uncertainty for the Star Ratings program and its future design. Carriers need to have nimble approaches and resources that respond to the evolving legal and policy landscape.
- The ruling is limited to the 20 measures Clover disputed in its lawsuit; however, the legal reasoning in the case and the US District Court ruling could apply to other measurements.
- Although the judgment only directly affects Clover, other MA plans have already cited the decision in separate, ongoing litigation, which increases the possibility that similar arguments could be applied more broadly. Organizations participating in the MA market should closely monitor these developments.
- CMS’s near-term steps will be critical for the market and current strategy. It is still unknown whether CMS will appeal the decision. MA organizations should be watching for further legal filings as well as additional guidance from the agency. Potential future guidance could address whether rebids will be permitted and, if so, the scope and timing of that process.
- MA organizations also need to keep an eye on the federal policies that will inform future federal policy decisions related to the design and implementation of the Star Ratings program. The Clover decision and related litigation may determine policy proposals advanced by Congress, CMS, or both.
Decision Creates Urgency for Modeling and Scenario Planning
The range of possible outcomes requires carriers to undertake robust scenario planning to ensure they are prepared to act on the options available to them and the multiple pathways that are likely to emerge.
Wakely’s actuarial and policy team will continue to monitor guidance from CMS as well as the ongoing legal process. To discuss specific scenarios and implications for your organization specifically and the market generally, contact our actuarial team.