CMS Likely Broke the Law on 2026 Star Ratings. The Ratings Still Stand.
A federal judge found Elevance Health substantially likely to win its claim that CMS unlawfully recalculated 2026 Medicare Advantage Star Ratings using different rules for different insurers. She denied emergency relief anyway, so the disputed ratings carry into the 2027 Annual Enrollment Period while three lawsuits and a separate appeal over the underlying methodology continue in parallel.
A judge found CMS’s fix illegal for one insurer. Then it stopped mattering whether it was illegal for everyone else.
Clover Health sued CMS in late 2025 after its largest Medicare Advantage plan’s Star Rating fell from 4 stars to 3.5 stars, arguing CMS unlawfully folded 20 measures into the calculation: 10 built on data CMS lacked authority to collect, and 10 added without the notice-and-comment rulemaking the Administrative Procedure Act requires. In late May 2026, Judge Lisa Godbey Wood agreed and ordered CMS to recalculate Clover’s rating without those measures. The company’s rating rose from 3.5 to 4.5 stars.
CMS then reran calculations for the rest of the Medicare Advantage industry in June 2026, but did not apply Clover’s remedy uniformly. The agency dropped some of the 20 contested measures, kept others, and separately cut a handful of measures that were never part of Clover’s case at all. Elevance asked CMS on the record to use the same methodology applied to Clover; CMS denied that request on June 26, 2026.
“CMS cannot rationally maintain that the same methodology is simultaneously legally defective for Clover, necessitating recalculation, and legally sound for all other MAOs, justifying no recalculation, absent some specific factual distinction between Clover and those other MAOs. No material distinction exists.” So argued Elevance Health in its complaint, filed July 1, 2026.
CMS treated the same 20 measures as illegal for one insurer and lawful for everyone else.
This is not a rounding difference in methodology. CMS applied one remedy to the plan that sued and won, and a narrower, differently-composed remedy to every other plan, including measures the original ruling never addressed. That inconsistency, not the underlying quality measures themselves, is what every subsequent lawsuit is actually arguing.
Deny the request. Appeal the ruling. Let the district court cases proceed.
CMS’s own procedural choices since the May 2026 Clover ruling, drawn from Fierce Healthcare and Becker’s Payer Issues reporting.
- June 26, 2026CMS denied Elevance’s informal request to recalculate its 2026 ratings using the same methodology applied to Clover Health.
- Late July 2026CMS filed notice that it would appeal the original Clover ruling to the Eleventh Circuit Court of Appeals, putting the underlying legal question before a second court.
- Aug. 4, 2026The government’s accelerated response deadline in Elevance’s case, reflecting the case’s expedited schedule.
- Aug. 27, 2026The court denied CMS’s motion to dismiss, meaning CMS must now litigate the merits rather than exit the case early.
“Substantially likely to succeed” and “relief denied” are not a split decision.
Most coverage of the August 27, 2026 ruling will read it as a loss for Elevance, since the company did not get the emergency recalculation it asked for. That framing misses the more consequential half of the ruling. A federal judge found Elevance’s central legal theory, that CMS cannot treat the same 20 measures as unlawful for Clover and lawful for everyone else, substantially likely to succeed. She denied only the request for immediate relief, and only because Elevance itself undercut its own urgency argument: the company waited from the ratings’ October 2025 publication until July 2026 to sue, then told the court its 2027 bid submissions could potentially be revised later than the deadline it first called urgent.
Two different courts now hold two different pieces of the same dispute
The Eleventh Circuit Court of Appeals is reviewing CMS’s appeal of the original Clover ruling, the decision that first found the 20 measures unlawful. That appeal could reverse the legal foundation the Elevance, SCAN, and Alignment cases all depend on, or it could affirm it and remove CMS’s last argument for treating insurers differently. Separately, the Southern District of Georgia and the U.S. District Court for the District of Columbia are hearing the narrower question of whether CMS’s differential treatment of specific insurers was itself unlawful. A ruling in either venue could change the practical outcome before the other resolves.
For health plans, the practical consequence is that 2027 quality bonus payment models, AEP marketing materials, and competitive bid resubmissions are all being finalized against a legal backdrop a federal judge has already called likely unlawful, with no confirmed date for when, or whether, that gets corrected.
CMS did not win on the merits. It won on the calendar.
One inconsistent recalculation, five functions with real exposure
Quality / Stars Governance
Every MA organization needs to know whether its own 2026 rating touched any of the 20 disputed measures, independent of whether it intends to litigate.
Legal / Regulatory Affairs
Two separate courts, the Eleventh Circuit and the district courts hearing Elevance, SCAN, and Alignment, could each move the outcome; tracking one without the other is an incomplete picture.
Finance / Actuarial
2027 quality bonus payment models built on the current ratings carry undisclosed litigation risk that a board or audit committee would reasonably expect to see quantified.
Compliance
CY2027 AEP marketing and agent-facing materials representing current Star Ratings as settled numbers may need disclosure language reflecting the pending litigation.
Sales / Marketing
Agent scripts and consumer comparison tools built on current ratings would need a defined correction path if a mid-cycle recalculation is ordered.
No single function owns this. The table below assigns responsibility; the list after it sequences the work.
The dispute touches quality governance, legal, finance, compliance, and marketing at once. Treating it as legal’s problem alone is the most common way plans will miss their own exposure.
| Function | Required response | Evidence to retain |
|---|---|---|
| Quality / Stars Governance | Identify whether the plan’s 2026 Star Rating calculation involved any of the 20 measures at issue in the Clover litigation, and quantify the potential rating and QBP impact if recalculated under Clover’s methodology. | Measure-level calculation worksheet; comparison of current rating to a Clover-methodology recalculation. |
| Legal / Regulatory Affairs | Track the Eleventh Circuit appeal and the Elevance, SCAN, and Alignment merits proceedings; assess standing and timing for the plan’s own potential claim. | Litigation tracking memo; internal legal opinion on exposure and filing deadlines. |
| Finance / Actuarial | Model 2027 QBP revenue under both the current ratings and a scenario where CMS is ordered to apply Clover’s methodology industry-wide. | Scenario-based QBP forecast; sensitivity analysis tied to litigation outcomes. |
| Compliance | Confirm CY2027 AEP marketing, enrollment, and agent-facing materials disclose Star Ratings accurately as currently published, without representing them as final or free of legal challenge. | Marketing material review sign-off; disclosure language documentation. |
| Sales / Marketing | Prepare a plan for correcting AEP materials, agent scripts, and consumer-facing comparisons if a ratings correction is ordered mid-cycle. | Contingency communication plan; agent notification protocol. |
Within 7 days
Confirm whether the plan’s 2026 Star Rating calculation used any of the 20 measures at issue in the Clover Health litigation, and brief legal and finance leadership on the plan’s specific exposure.
Within 30 days
Build a 2027 QBP revenue scenario that models the outcome if the Eleventh Circuit affirms the Clover ruling or if Elevance, SCAN, or Alignment succeed on the merits, and share it with the finance committee alongside the current-ratings baseline.
Within 60 to 90 days
Establish a standing process, jointly owned by quality, legal, and compliance, for monitoring MA Star Ratings litigation outcomes and translating any court-ordered recalculation into a defined internal correction workflow.
PCOOB Weekly’s assessment is that the August 27, 2026 ruling changes the character of this dispute more than it resolves it. A court finding a plaintiff “substantially likely to succeed on the merits” while still denying it relief is not a split decision; it is a signal that the legal question is largely settled in the plaintiff’s favor and that only timing, not merit, stands in the way. Judge Wood’s own reasoning, that a preliminary injunction exists to prevent harm before a case can be resolved, and that Elevance’s months-long delay undercut its own urgency argument, reads as an invitation to future plaintiffs to move faster, not as a defense of CMS’s methodology.
The available evidence also suggests this is not an isolated episode. Becker’s Payer Issues reported that MA Star Ratings litigation has now forced a CMS recalculation in three consecutive cycles, including a prior industry-wide recalculation tied to the 2024 ratings. Read against that pattern, the 2026 dispute looks less like a one-off methodology error and more like a program where the underlying measure-selection and rulemaking process produces challengeable outcomes on a recurring basis. This is PCOOB Weekly’s inference from the reported pattern, not a confirmed CMS admission, but it is the kind of pattern boards and finance committees should ask about directly rather than treating each year’s litigation as a discrete event.
Plans that treat this as Elevance’s, SCAN’s, and Alignment’s problem are underestimating their own exposure. The legal theory at the center of all three suits does not depend on which insurer is asking. Any Medicare Advantage organization whose 2026 rating involved those measures has the same underlying question to answer, whether or not it intends to litigate.
Questions payer leaders should ask
- 01Did our 2026 Star Rating calculation involve any of the 20 measures a federal court found CMS used unlawfully for Clover Health?
- 02If CMS were ordered to apply Clover’s recalculation methodology industry-wide, how would our 2027 quality bonus payment estimate change?
- 03Have our CY2027 AEP marketing and agent-facing materials been reviewed for how they represent Star Ratings that a federal court has already questioned?
- 04What is our internal deadline for deciding whether to pursue our own legal claim, given Judge Wood’s finding that Elevance waited too long to seek emergency relief?
- 05Who owns the decision to update bonus payment forecasts and enrollment materials if a mid-cycle recalculation is ordered?
- 06Are we tracking both the Eleventh Circuit appeal and the separate district court proceedings, since a ruling in either could change the outcome?
- 07Does our finance team have a documented, board-ready explanation for why 2027 QBP projections carry litigation-related uncertainty?
Sources
- Fierce Healthcare, “CMS appeals court decision behind 2026 MA star ratings recalculations” (July 22, 2026)
- Healthcare Dive, “Elevance sues CMS after Medicare Advantage stars recalculation” (July 2, 2026)
- Healthcare Dive, “‘The system is undeniably broken’: More insurers sue CMS over Medicare Advantage stars” (July 13, 2026)
- Healthcare Dive, “CMS recalculates Medicare Advantage stars after Clover lawsuit loss, but not a freebie for plans” (June 18, 2026)
- Becker’s Payer Issues, “Federal court denies Elevance’s bid for emergency 2026 star ratings recalculation” (August 28, 2026)
- Becker’s Payer Issues, “Clover beats CMS in Medicare Advantage star ratings lawsuit”
- Georgetown University Health Care Litigation Tracker, “Elevance Health Inc. et al. v. Department of Health and Human Services et al.”
- Georgetown University Health Care Litigation Tracker, “SCAN Health Plan v. Department of Health and Human Services et al.”
Until next week, stay briefed.
Frequently asked questions
What did the court actually decide on August 27, 2026?
Judge Lisa Godbey Wood found Elevance Health “substantially likely to succeed on the merits” of its claim that CMS unlawfully used disputed quality measures to calculate its 2026 Medicare Advantage Star Ratings. She denied Elevance’s request for an emergency recalculation, finding the company had not shown irreparable harm and had waited too long after the ratings were published to seek emergency relief. She also denied the government’s motion to dismiss, so the case continues.
Does this ruling apply to Medicare Advantage organizations that have not sued CMS?
Not directly. The ruling resolves Elevance’s specific request for emergency relief in its own case. However, the underlying legal question, whether CMS can treat the same measures as unlawful for Clover Health and lawful for other insurers, is the same question any MA organization affected by those 20 measures would face if it chose to litigate.
Why did the court deny emergency relief if it found Elevance likely to win?
The judge found Elevance had not demonstrated irreparable harm, partly because the company waited several months after the 2026 ratings were published in October 2025 to file suit in July 2026, and partly because Elevance itself indicated its 2027 bid submissions could potentially be revised later than the deadline it first argued was urgent.
What is the Eleventh Circuit appeal, and how is it different from the Elevance case?
The Eleventh Circuit Court of Appeals is reviewing CMS’s appeal of the original Clover Health ruling, the decision that first found CMS used 20 measures unlawfully. That appeal addresses the underlying legal question for the whole industry. The Elevance, SCAN, and Alignment cases are separate district court proceedings addressing whether CMS treated those specific insurers unlawfully by not extending Clover’s remedy to them.
When will health plans know if 2026 Star Ratings will be recalculated again?
There is no confirmed timeline. The Eleventh Circuit appeal and the district court merits proceedings for Elevance, SCAN, and Alignment are all still pending, and none of the available reporting as of this writing indicates when any of them will be decided.