A court ruling narrows the evidence base for Medicare Advantage Star Ratings

In June 2026, CMS recalculated Medicare Advantage Star Ratings for every contract and reopened the 2027 bid cycle, giving eligible plans until June 29, 2026 to resubmit. The trigger was a federal court ruling that 20 of the measures behind Clover Health's 2026 rating rested on data sources CMS lacked statutory authority to use or were adopted through rulemaking the agency did not properly complete.

For plans near the four-star threshold (42 U.S.C. § 1395w-23(o)), the stakes are immediate. Quality Bonus Payments, benchmarks, and benefit design budgets all turn on a half-star move. Plans that crossed the line under the revised methodology can resubmit stronger 2027 bids before the window closes. Plans that slipped face a harder question about where their quality performance now stands. CMS's expected appeal extends that uncertainty past the resubmission window, leaving part of the measure set unsettled well into the bid cycle.

The deadline is only the near-term story. A rating that plans once treated as settled moved mid-cycle, and the program's weight is shifting toward the clinical data that survived the court's review, namely Healthcare Effectiveness Data and Information Set (HEDIS®), the Health Outcomes Survey (HOS), and Consumer Assessment of Healthcare Providers and Systems (CAHPS) survey. Quality strategies built around administrative measures now face real durability risk.

A structural inflection for the Stars program

The recalculation matters less for its immediate redistribution of bonus dollars than for its signal about the program's direction. Two of the court's findings point toward a measure set anchored more firmly in clinical data. Measures derived from call center logs, appeals records, and administrative files could be excluded from the rating calculation, increasing the relevance of clinically grounded instruments at the core of the program, like HEDIS, the Health Outcomes Survey, and CAHPS.

The recalculation turns Star Ratings volatility into both a financial-planning and quality operational concern. A single court order revised Quality Bonus Payment eligibility for affected contracts, demonstrating that ratings can shift inside the planning calendar and that the revenue attached to them is less predictable than plans have assumed. Plans need both financial models that can absorb rating volatility and solid clinical-data infrastructure to support defensible Stars performance year-round.

The legal basis for the recalculation

On May 27, 2026, a U.S. District Court partially granted summary judgment in favor of Clover Health in a case against CMS. The court ordered CMS to recalculate Clover's 2026 Star Rating after finding that 20 measures included in the calculation did not meet legal requirements.

Clover filed the lawsuit in November 2025, alleging its PPO plan rating dropped improperly from four stars to 3.5 stars for 2026. Clover estimated that the reduction cost approximately $120 million in missed Quality Bonus Payments. Following the court-ordered recalculation, CMS raised Clover's PPO rating to 4.5 stars and instructed the company to resubmit alternate bids. The ruling rested on two distinct legal grounds.

First, the court determined that CMS relied on 10 measures using data collected outside the agency’s statutory authority. CMS's Stars calculations are anchored to data from HEDIS, HOS, and the CAHPS survey. Measures drawing on call center data, appeals records, and certain medication adherence sources drew from outside those systems. The court found that those measures rested on data sources outside CMS’s statutory authority and therefore could not lawfully be included in Clover's rating.

Second, the court found that CMS incorporated a separate set of 10 measures through technical guidance and sub-regulatory communications rather than formal notice-and-comment rulemaking. Because those measures directly affected quality ratings and bonus payments, the court concluded they required a formal rulemaking process. Although the ruling does not automatically apply to other MA plans, if the court’s data-source finding holds, other Medicare Advantage organizations may pursue similar claims, and CMS may need Congressional action to put the contested categories of Stars data on firmer legal footing.

‍

CMS's response and the appeal ahead

CMS responded by recalculating 2026 Star Ratings across every Medicare Advantage contract, extending the finding well beyond Clover. The agency removed the ten measures tied to unauthorized data sources but has retained the ten challenged on rulemaking grounds. The split reflects the two independent findings and a deliberate strategy. By acting on only one category of challenged measures, CMS limited the immediate disturbance to ratings and Quality Bonus Payments while preserving the procedural question for appeal.

The procedural question is unlikely to be resolved soon. After the district court declined CMS's request to reconsider, the agency is expected to pursue an appeal to the Eleventh Circuit Court of Appeals, where the outcome will determine whether the rulemaking holding becomes binding precedent, is narrowed, or is reversed. Until the court rules, the legal standing of measures established through sub-regulatory guidance remains unsettled, and plans that believe those measures materially affected their ratings are likely assessing whether Clover’s challenge offers a path worth pursuing.

The dispute also exposes the age of the program's statutory foundation. The governing provision, 42 U.S.C. § 1395w-22, was enacted in 1997, well before the Stars program reached its present scale, and Congress may need to legislate to expand CMS's authority to collect data and introduce new measures. A legislative response would add a further variable as the program approaches the SY2029 redesign.

The recalculation reshapes health plan strategy

If CMS ultimately cannot rely on the challenged data sources, Star Ratings will depend more heavily on HEDIS, HOS, and CAHPS. At the same time, CMS may also face stronger pressure to move measure updates through formal notice-and-comment rulemaking, which can run two or three years. The table below maps the operating consequences for quality and finance leaders.

‍

‍

Building a Stars strategy for the long term

MA plan quality leaders need to pressure-test their current Stars strategy against a potentially contracted measure set that relies more heavily on HEDIS, HOS, and CAHPS, the data sources explicitly authorized in statute. Independent of the litigation, CMS has already signaled a deliberate shift toward outcomes-based measures and away from administrative process measures, a direction the 2027 final rule accelerated by removing 11 administrative measures from the program.

The litigation and the regulatory trajectory are moving in the same direction. A durable Stars strategy in this environment anchors to outcomes-based measures and defensibility. Five priorities define a resilient quality strategy in this environment:

1. Close care gaps at the point of care. HEDIS hybrid measures (those combining administrative claims with clinical record retrieval) are the highest-weighted measures in the program and require the most complete data to score accurately. Plans with year-round data retrieval programs outperform plans that chase records in the final months of the measurement year.
2. Manage chronic conditions continuously. Diabetes, cardiovascular, and behavioral measures reward consistent member engagement throughout the year. Care gap closure programs that run across the full measurement year produce the most consistent scores.
3. Invest in member experience performance. CAHPS results are among the most legally stable measures in the program under the current statutory framework, but they can be the hardest to move quickly. Plans that enhance their member experience infrastructure now will hold an advantage in successive rating cycles.
4. Maintain a complete and defensible audit trail. RADV audit exposure and Stars auditability both depend on diagnosis-level clinical evidence attached to every submitted code and every abstracted measure. Plans that can produce that evidence trail on demand reduce both audit risk and the administrative cost of responding to CMS inquiries.
5. Treat retrieval rate as a performance metric. Complete clinical data is the precondition for hybrid HEDIS measures, and retrieval rates vary widely across vendors. A retrieval rate near 85% per patient across a broad provider network sits at the high end of current performance, and plans can use that as a benchmark when evaluating their own data infrastructure.

‍

Clinical data quality is the common foundation across all five strategies. A successful Stars strategy requires complete and timely retrieval of clinical records, accurate abstraction across hybrid digital and manual measures, and coding that captures diagnosis specificity at the level CMS auditors expect.

Plans are increasingly consolidating clinical data retrieval, HEDIS abstraction, risk adjustment coding, and quality reporting onto a single platform, which gives quality and finance leaders one data layer for the measure performance that determines Quality Bonus Payment eligibility. Reveleer is one of the value-based care platforms built around that consolidated model. For health plans reassessing their quality infrastructure as the Clover litigation plays out, a unified data layer reduces the operational risk that compounds during regulatory uncertainty.

Beyond the recalculation

CMS's recalculation hands a subset of plans a short-term revenue opportunity, and those near the four-star threshold have a narrow window to act. The more durable signal is structural. The evidence base for Stars is narrowing toward clinical data, and the measurement framework will keep shifting through appeal and potential rulemaking. The plans and platforms positioned to absorb that volatility are the ones whose performance rests on clinically grounded HEDIS execution, complete data retrieval, and accurate outcomes documentation, managed as a continuous discipline rather than a once-a-year response to the ratings CMS publishes.

‍

‍

FAQs

How does the Clover Health ruling affect 2027 Medicare Advantage bids?

The Clover Health ruling triggered a CMS recalculation of 2026 Star Ratings that reopened the 2027 bid cycle for plans whose ratings improved. Plans crossing the four-star threshold would become eligible for quality bonus payments and could resubmit 2027 bids, with a final deadline of June 29, 2026.

Why did CMS recalculate 2026 Medicare Advantage Star Ratings?

CMS decided to recalculate 2026 Star Ratings in June 2026 after a federal court ruled that 20 measures in Clover Health's rating were legally invalid, 10 based on data collected outside CMS's statutory authority, and 10 added without required notice-and-comment rulemaking. CMS extended the recalculation to all MA contracts for half of the measures, removing the unauthorized measures industry-wide.

If the Eleventh Circuit reverses the data-source ruling, do the removed measures return to 2026 ratings?

A reversal would restore CMS's authority to use the contested data sources, but the effect on 2026 ratings is uncertain. CMS has already recalculated and reopened bids on the current basis, and any reinstatement would depend on the court's remedy and how CMS chose to implement it. Plans should treat the current ratings as operative while modeling the exposure a reversal would create.

How should a plan decide whether to pursue its own Star Ratings challenge?

The Clover decision offers a framework rather than automatic relief. A plan would need to show that invalidated measures materially affected its rating and that the resulting financial harm justifies litigation. The decision belongs with outside counsel, weighed against the cost and timeline of a challenge, the revenue at stake, and the likelihood that the Eleventh Circuit upholds the underlying holding.