On May 27, a federal judge in Georgia ordered the Centers for Medicare & Medicaid Services (CMS) to recalculate Clover Insurance Company's 2026 star rating. With bids due in early June, the timing matters, and so does the reasoning behind it.
Here's what the U.S. District Court for the Southern District of Georgia actually decided, why this case isn't a repeat of the Star Ratings fights we've already seen, and what Medicare Advantage (MA) plans should be thinking about right now.
What happened
Clover sued the U.S. Department of Health and Human Services (HHS) and CMS back in November, arguing the agencies got its 2026 Star rating wrong – and got it wrong unlawfully, in violation of the Administrative Procedure Act (APA) and the nondelegation doctrine. The plan was scored at 3.5 stars instead of the 4 stars it says it earned. That half-star gap is worth about $120 million to Clover in quality bonus payments and related funding.
Judge Lisa Godbey Wood refused to throw the case out and ruled for Clover in part, telling CMS to go back and recalculate. One caveat worth keeping in mind: CMS argued in earlier filings that pulling the disputed measures wouldn't actually lift Clover to 4 Stars, it would stay at 3.5. Clover says otherwise. So a recalculation order isn't the same thing as a guaranteed bump in the rating, and we don't yet know where the recalculated number lands.
Why this one is different
Plans have been hauling CMS into court over Star Ratings for a few years now, with uneven results. SCAN Health Plan and Elevance Health won in 2024, and those wins pushed CMS to recalculate that year's ratings across the board. Humana went the other way – it lost twice in front of Judge Reed O'Connor in the Northern District of Texas.
What makes Clover’s suit stand out is the argument it's built on. The earlier cases mostly came down to methodology mechanics: the implementation of Tukey outlier deletion, how cut points get set, or a few inbound sales calls measured by call center measures. Clover pushed past that. It argued that some measures don't belong in the program at all because they have nothing to do with the clinical quality or health outcomes CMS is allowed to evaluate in Medicare Advantage – and, more aggressively, that CMS handed off decision-making it wasn't allowed to hand off.
One example is one of the appeals measures, which scores plans based on how many of their coverage denials get overturned by the Independent Review Entity (IRE), a private contractor. Clover's point: when a private entity's decisions effectively drive a federal quality score, that runs into the private nondelegation doctrine. The plan leaned on the Supreme Court's 2025 ruling in FCC v. Consumers' Research to make the case. Clover also sought relief related to a medication adherence measure, arguing the way it's built can reward dispensing patterns that aren't clinically appropriate.
A judge willing to dig into which measures CMS is even allowed to use – not just whether the math behind them holds up – is a different kind of situation than the industry has encountered to date.
None of this is settled. A single district court order isn't the last word. The request for the court to consider CMS’ reply brief is pending, CMS can appeal, and the scope of the recalculation will get clearer over the next few weeks or months. But if you run an MA plan, the takeaway is hard to miss: the legal ground under this program is still shifting.
Where to learn more
We're hosting a webinar next week to break the ruling down and talk through what it means for your MA strategy and for Star Ratings heading into the summer months. Ana Handshuh, Principal, CAT5 Strategies and Melissa Smith, Founder, Newton Smith Group, will walk through the decision, the arguments at the center of it, how it stacks up against the SCAN, Elevance, and Humana cases, and what plans should be thinking about next. Stay tuned for more details.
This article is for informational purposes and isn't legal advice. Plans should talk to counsel about their own situation.