Elevance Health Files Lawsuit Against HHS Over Medicare Quality Ratings

Elevance Health joins a long list of companies suing the Department of Health and Human Services (HHS) over its Medicare Advantage star ratings 2025. 

The firm, located in Indianapolis, filed a lawsuit in a district court in Texas, claiming that the regulators’ use of an “arbitrary and capricious” approach to determine the quality ratings cost the company $375 million in refunds and incentive payments.

Other firms that have gone the litigation route against HHS include Humana, UnitedHealth and Centene. The primary purpose, of course, is to elevate their scores and protect the gains from the MA program.

During the open enrollment period for Medicare, the star ratings system is intended to assist Medicare recipients in comparing the quality of Medicare Advantage and prescription drug plans. The scores are determined by the CMS by first evaluating a variety of quality metrics and then awarding a score ranging from one to five depending on how well the plans perform.

It’s important to note that scores have substantial repercussions for payers from a financial standpoint. When it comes to bonus payments, insurers that earn an overall rating of four or above are eligible for larger amounts. In addition, higher scores indicate that payers are eligible to earn a larger refund when they submit bids lower than the benchmark financial criteria set by regulators.

As a result of regulators updating their methodology and the expiration of pandemic-era adjustments, insurers’ income from the private Medicare program has been in peril, and mean star ratings have been declining for many years. This year, 42% of MA plans with prescription medication coverage earned four or more stars, according to the CMS. In 2022, that number was 68%, and by 2025, it will have dropped to 40%. 

The insurers argue that CMS’ method of determining quality ratings is unfair. In Elevance’s lawsuit, the payer said the regulator’s method is “fraught with statistical variance, which can cause improper impacts on [a Medicare Advantage Organization’s] overall Star Rating.”

The suit states that for 2025, one of Elevance’s contracts was given a score of 3.749565, which was then adjusted down to 3.5 stars. The payer argued that rounding to the millionth decimal place is not required by law or regulation and that the plan would have received four stars from CMS if they had rounded to the hundredth or thousandth decimal place.

When the CMS took into account the case-mix index, dependability of the score, and distance from the national average when determining customer survey ratings, Elevance claimed that two contracts were unfairly penalized twice.

The lawsuit requests that the court reassess one plan’s star rating to four stars and provide information for all of Elevance’s contracts required to support the star rating computations for 2025 and the following years.

The CMS said it refrains from commenting on ongoing litigation, and the HHS did not respond to requests for information.