The Centers for Medicare & Medicaid Services (CMS) filed notice of appeal on July 21 in Clover Insurance Company v. HHS, taking the Star Ratings decision to the Eleventh Circuit Court of Appeals, according to Fierce Healthcare.
The underlying ruling came from Judge Lisa Godbey Wood of the U.S. District Court for the Southern District of Georgia on May 27. The court found CMS had drawn on data sources outside its statutory authority for 10 Star Ratings measures and had adopted 10 others without notice-and-comment rulemaking. Recalculating without the 20 disputed measures raised the rating on Clover's largest contract and restored roughly $120 million in bonus payments.
RISE covered the ruling and the filings it prompted from other plans in July. Four weeks later the picture has moved, in more than one direction.
Where each case stands
July 14, the D.C. Circuit sided with CMS. In a separate and earlier Alignment Healthcare challenge, No. 25-5239, the appellate panel affirmed judgment for the government. The case turned on survey administration rather than the data-source and rulemaking questions at the center of Clover. The result is a useful corrective to the assumption every Star Ratings challenge lands the same way. Appellate courts have now ruled for CMS once and are being asked to rule against it in another matter.
July 21, CMS appealed Clover. The agency has not publicly explained its reasoning, and HHS declined to comment. Clover's position, through a spokesperson, is that "Judge Wood's decision was thorough and well-reasoned and should be upheld."
August 3, Alignment moved for summary judgment. Alignment's newer case, filed July 10 in the U.S. District Court for the District of Columbia before Judge Christopher R. Cooper, asks the court to apply the Clover approach and remove 10 measures from its own rating calculation. An amended complaint landed July 31, the summary judgment motion followed August 3, and the government's response is due August 28. SCAN Health Plan filed a comparable case in the same court on July 7, seeking 4.5 stars rather than 4 and citing roughly $125 million.
August 17, Elevance was stayed. Elevance filed July 1 in the Southern District of Georgia, before Judge Wood, the same judge who decided Clover, and cited about $115 million across five contracts. The government moved to dismiss on July 31, both sides filed supplemental briefs August 14, and the court stayed the case August 17 with an answer due September 4.
Four active matters, two district courts, one appellate court, and no resolution before the fall.
What the appeal changes for plans
CMS issued a memo on June 17 describing a voluntary recalculation of 2027 quality bonus payment ratings for certain contracts, rebuilt on statutorily authorized data alone, with a hold-harmless provision so no plan received a lower rating. The memo was the practical response to the ruling, and plans have been budgeting against it.
The appeal does not undo the recalculation. It does mean the legal basis underneath it is under review by a higher court while plans finalize 2027 bids and forecasts. Finance and actuarial teams working from recalculated ratings are working from a number the Eleventh Circuit has been asked to examine.
The measures left standing are the ones two teams share
Here is the detail with the longest reach. The recalculated ratings rest on HEDIS®, CAHPS, and HOS data. Strip out the measures the court questioned, and what remains is clinical performance, member experience, and health outcomes surveys.
Those are the measures quality teams and risk adjustment teams influence through the same member touchpoints. A completed annual wellness visit closes gap opportunities and captures documentation in one encounter. A member who answers the phone for one outreach campaign is the same member the other team is calling. When administrative measures carried part of the rating, operational discipline offset clinical performance. As the rating concentrates on HEDIS®, CAHPS, and HOS, the offset thins.
What this means for health plans
Litigation outcomes are outside anyone's control, and no plan should build a quality strategy around a court calendar. The durable read is simpler. Whichever way the Eleventh Circuit rules, the measures your quality and risk adjustment teams jointly influence carry more of your rating than they did two years ago.
Plans running quality and risk adjustment as separate operations with separate member lists have time to change it, and the change is operational rather than structural. Combining a gap-closure call with a documentation touchpoint does not require a reorganization. It requires the two teams to work from one member view and agree on who reaches out first.
For plans watching the cases, the near-term markers are concrete: the government's response to Alignment is due August 28, Elevance's answer is due September 4, and Eleventh Circuit briefing will run past both.
This article describes publicly reported litigation developments and is not legal advice.
Questions to consider
- Do your 2027 financial forecasts reflect the recalculated ratings, and does anyone own tracking the appeal?
- Do your quality and risk adjustment teams work from one member list, or two?
- Which of your members received separate outreach from both teams in the past 90 days?
- If your rating rests more heavily on HEDIS®, CAHPS, and HOS, where does your data quality in those three carry the most risk?
- Who in your organization is positioned to explain these cases to your board?
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