PCOOB Weekly  •  July 02, 2026  •  Independent Analysis for Health Plan Leaders

The Measure Is Gone.
The Risk Isn’t.

What CMS’s 2027 QBP voluntary recalculation and the final rule’s forward-looking removal of 13 Part C and Part D measures reveal about health plan operational governance risk

EXECUTIVE SUMMARY

On June 17, CMS sent a letter to Medicare Advantage organizations that most quality teams are reading as a measure-removal story. It is not. It is a governance stress test, and it is the near-term layer of a larger structural shift already written into the CY2027 final rule.

The voluntary recalculation of 2027 Quality Bonus Payment ratings, triggered by Clover Health’s successful federal lawsuit challenging 20 improper measures, changed the arithmetic for some plans. But the organizational reflex it has produced may be the more consequential problem. Separately, the CY2027 final rule published in April removes 13 Part C and Part D measures from the 2028 and 2029 Star Ratings periods, a longer-horizon shift that is already affecting how plans should be allocating quality, compliance, and technology resources right now.

THE BACKGROUND

What CMS actually did — and what it did not

The June 17 HPMS memo recalculated 2027 QBP ratings following a federal court ruling in favor of Clover in May 2026 establishing that CMS broke the rules in two major ways when calculating specific Part C and Part D measures. While the lawsuit specifically involved Clover (which fought for a 4.5-star rating to reclaim roughly $120 million in lost bonus funding), CMS decided to apply the ruling across the board and recalculated the ratings for all MA plans using only approved data sources like HEDIS (Healthcare Effectiveness Data and Information Set), CAHPS (Consumer Assessment of Healthcare Providers and Systems), and HOS (Health Outcomes Survey). In doing so it removed a subset of Part C and Part D measures: special needs plan care management, health plan complaints, members choosing to leave, timely appeals decisions, appeals decision reviews, and call center foreign language interpreter and TTY availability. The recalculation applied only upward. No plan received a lower rating. And CMS was explicit: this recalculation does not represent a definitive policy position on the 2027 star ratings framework.

The ruling that triggered this recalculation rested on two separate grounds. The first was unauthorized data sources: CMS collected data for certain measures without legal authority to do so. The second was procedural rulemaking deficiency: measures were embedded without following required notice-and-comment procedures.

CMS addressed only the first ground. It removed the data-source-unauthorized measures across all plans. It retained the rulemaking-challenged measures for every organization except Clover. That split is not administrative tidying. It is a legal position CMS is now defending in an unresolved proceeding.

Plans interpreting the partial recalculation as a sign the legal environment is stabilizing are reading the wrong signal.

The measures that left Stars did not leave your compliance exposure

This is the point most likely to be misread at the operational level, and the one with the largest downstream consequence.

Timely appeals decisions and appeals decision reviews are no longer QBP measures for 2027. But they remain core elements of CMS’s ODAG audit protocol. ODAG covers four specific domains: organization determinations, standard and expedited appeals processing, grievance handling, and independent review organization referrals, and Stars removal impacts none of these. The same documentation requirements, the same timeliness standards, and the same audit exposure still apply. The 2024 Part C/D enforcement report documented that 89 percent of civil monetary penalty violations carried aggravating factors, many in the appeals space, citing prior non-compliance as the aggravating condition. CMS enforcement actions for ODAG-related failures have historically reached multiple millions of dollars per affected contract year. That exposure does not diminish when Stars removes the measure. It persists on the same audit calendar, with the same documentation standards, and the same civil monetary penalty authority the agency has always held.

Health plan complaints and members choosing to leave are no longer QBP-weighted, but they remain CMS oversight indicators, drive member retention economics, and feed into CAHPS-based measurements informing future years. Call center foreign language interpreter and TTY availability may have left the QBP calculation, but it still a part of Title VI of the Civil Rights Act or Section 504 of the Rehabilitation Act. OCR enforces both, independently of Stars.

Five misreads that could impact operational decisions:

The three questions every removed measure should be run through

The strategic insight from both the Clover recalculation and the final rule removals is the same: payer leaders need to separate three distinct questions about every measure that leaves the scorecard. Conflating them is where governance gaps form.

The organizational risk is not that plans will stop filing required reports. The risk is subtler: operational attention, escalation priority, and investment decisions will drift toward the measures still carrying bonus weight. In organizations where Stars performance governs quarterly reviews and budget allocation, attention follows the scorecard. When the scorecard changes, priorities shift before the compliance framework does.

The forward-looking removal: 13 measures, two rating years

The June 17 Clover recalculation is the near-term event. The structural change runs deeper. The CY2027 Medicare Advantage and Part D final rule, published in the Federal Register on April 6, 2026, removes 13 Part C and Part D measures across the 2028 and 2029 Star Ratings periods. They represent CMS’s affirmative policy decision about what the Stars program should reward going forward.

CMS’s stated rationale: reduce measures that create administrative burden without signaling meaningful quality improvement, retire measures where plan performance has largely topped out, and shift the program toward outcomes, clinical care quality, access, and member experience where variation across contracts remains actionable. The 2027 Star Ratings measures document and the final rule’s regulatory impact analysis are the authoritative references.

Plans should be precise about the count. Depending on the counting method, references to 10, 11, or 13 removed measures may all be correct simultaneously. Some count unique measure concepts, a single operational area appearing in both Part C and Part D counted once. Some count each Part C and Part D entry separately. Some count by rating year, separating 2028 removals from 2029 removals. If compliance uses one counting method, Stars uses another, and finance uses a third, the organization will talk past itself in planning conversations. The counting method should be defined and shared before any resource reallocation decision is made.

The phasing matters operationally. The 2028 removals and 2029 removals carry different planning horizons and different resource implications. A plan that treats them as a single undifferentiated reduction is missing the sequencing that makes multi-year response planning possible.

Measures removed from the Star Ratings program

Based on CY2027 final rule and CMS 2027 Star Ratings measures document. Effective rating year is when the measure no longer affects the Stars score — not when it was announced.

Note: Depending on whether mirrored Part C/Part D entries are counted separately and whether entries are grouped by rating year, references to 10, 11, or 13 removed measures may all be accurate. Plans should standardize their internal counting method before modeling impact.

The financial picture is more complicated

175 MA prescription drug plans received a 3.5-star rating for 2026. The 4-star threshold is where Quality Bonus Payments accelerate sharply. Plans at 3.5 receive no bonus; plans at 4 receive enhanced rebates and expanded bidding flexibility. With the recalculation potentially moving some of those 175 plans above the threshold, the financial case for bid resubmission is real for eligible contracts.

CMS opened bid resubmission from June 25 through June 29, 2026, giving plans with contracts that received higher QBP ratings a narrow window to rebuild actuarial models, reprice benefit packages, and submit revised bids.

The durability question complicates that calculus. CMS has stated the recalculation is not a definitive policy position. A plan that reprices its 2027 benefit structure on the basis of a recalculated 4-star rating, which could be modified again by further litigation or rulemaking, may have built its benefit structure on a foundation the agency itself declined to call final. Though that is not a reason to avoid resubmission for contracts with clean cases, it certainly is a reason to ensure actuarial assumptions account for the scenario in which the rating does not hold.

This is not hypothetical. In 2024, CMS recalculated star ratings following methodology challenges from Elevance Health and SCAN Health Plan. The recalculation is now in its third instance across recent program years. Plans treating each instance as isolated are misreading the structural dynamic.

What CMS is actually testing

Strip away the measure list and what CMS is asking, through both the Clover recalculation and the final rule removals, is a single question: Can plans maintain quality and operational discipline when the measure is no longer tied directly to bonus payments?

CMS’s own language in the final rule preamble is instructive.

On Customer Service: the preamble states that timely, accurate, high-quality customer service remains essential whether or not the measure appears in the Star Ratings calculation.

On appeals: CMS’s documented position is that appeals represent a critical beneficiary protection and plans remain accountable even after the measure leaves Stars.

The preamble further describes CMS’s goal to “simplify and refocus” the program toward measures where performance variation across contracts is actionable and where the measure meaningfully informs beneficiary plan comparison. And it explicitly states that CMS will continue to evaluate all measures in the Star Ratings program to determine whether they are serving the program’s purpose or should be amended, removed, or respecified. The current list is not the final one. The Stars program is being narrowed. The oversight framework is not.

What CMS wants to know

The table below maps surface-level CMS regulatory actions to documented CMS rationale from the CY2027 final rule preamble. The right column reflects CMS’s stated reasoning, not inference.

Beneath the surface, CMS is asking six specific questions about plan performance. Each one is answerable. But most require infrastructure, data lineage, operational controls, and governance visibility, that health plans built for a different version of the Stars program.

What this reveals, and what plans must do before October

The October 2026 preliminary star ratings release is the next major decision gate. CMS will publish 2027 preliminary ratings in October, with final ratings following in January. Plans traditionally have a brief window after preliminary release to dispute factual computation errors through HPMS, but that dispute process addresses data and calculation errors only. It does not provide a mechanism for challenging the legal validity of the measures themselves.

Plans that receive October scores they believe are affected by the rulemaking-challenged measures, the measures CMS retained for all plans except Clover are not without options. But the mechanism is federal litigation, not an administrative recalculation request to CMS. The Clover precedent establishes that a rulemaking-deficiency argument can succeed in federal court. The question is whether a given plan’s situation supports it and whether the financial exposure justifies the litigation path.

The CareFirst case gives that question more near-term urgency than most plans currently recognize. CareFirst’s own star ratings challenge was paused during Clover’s proceedings. With the Clover ruling in hand, CareFirst is positioned to advance its case. If CareFirst prevails on the rulemaking argument, the harder of the two legal theories, it establishes a second, independent precedent that extends the available legal basis beyond the specific measures in the original Clover case. The procedural timeline for CareFirst likely runs 12 to 24 months, meaning the next major legal development in this space will overlap directly with the 2027 and 2028 program years. Plans that act only after a second ruling will have spent two program years in a posture they could have assessed before October.

For plans that do not intend to litigate, the October preparation is about documentation quality and scenario readiness. Five specific actions produce the most governance value before October’s release:

The technology and operational dimension

What the recalculation exposes beneath the surface

Strip away the legal mechanics and the financial arithmetic, and this recalculation is exposing something the industry has known for years and not fully resolved: Stars performance in most health plan organizations is managed through systems that were not built for what the program now requires.

When the measure set was broader and more process-oriented, a plan could track a large number of indicators with moderate precision and perform acceptably through volume. As CMS narrows the set toward outcomes, clinical quality, and meaningful member experience, and as each remaining measure carries a larger share of the financial result, the tolerance for execution gaps shrinks.

The current recalculation removed six Part C measures and all Part D measures from QBP. That concentration means the financial weight of each surviving measure increases. A plan that underperforms on member experience, care management, or clinical outcome measures now faces a more binary result: perform at scale, or lose the bonus.

The technology implication is direct. Removing a measure from Stars does not remove it from the data architecture required for compliance. Plans that respond by deprioritizing appeals data infrastructure, complaint tracking workflows, or call center performance monitoring are creating compliance exposure in exchange for a prioritization shift the regulatory and audit framework does not support.

The organizations positioned to navigate the narrowed measure set are not necessarily those with the most reporting capability. They are the ones with operational control connecting member data, provider data, intervention tracking, and performance measurement across functions and vendor relationships, without manual reconciliation bottlenecks. When fewer measures carry more weight, operational precision matters more, not less.

Preparation framework

What CMS is quietly building toward — and how payer leaders can prepare

By separating payment-quality measurement from operational oversight, CMS is compelling plans to ask a harder question: which risks are still alive even if the measure is no longer scored? The scorecard is shrinking. CMS oversight is not. The work did not disappear. It moved into a different accountability channel.

What CMS is effectively forcing plans to build is a mature payer operating model, one where regulatory change is tracked quickly, measure impact is modeled by contract, data lineage is clear, operational ownership is assigned, evidence is audit-ready, vendors are monitored, and finance can explain QBP exposure without scrambling. That model does not exist at most health plans today. The measure removals are accelerating the pressure to build it.

Five things payer leaders should act on now

The delegation oversight gap

When a Stars measure served as the primary performance standard in a first-tier, downstream, or related entity (FDR) agreement, its removal from the scorecard does not automatically resolve the compliance obligation, but it does create a structural gap in how the plan monitors and enforces it.

Delegation agreements across the industry were built during a period when Stars measures provided the natural monitoring anchor for vendor performance. Appeals timeliness was a Stars measure, so the appeals delegate agreement could reference it as the performance baseline. Complaints were Stars-weighted, so the complaint handling vendor’s SLA tracked to the Stars expectation. SNP care management had a Stars score, so the care management delegate’s oversight framework was calibrated to it. Call center accessibility was Stars-measured, so the call center vendor contract could cite the measure’s threshold as the governing standard.

When those measures leave Stars, two specific risks emerge simultaneously. First, agreements that use Stars measure scores as performance thresholds become ambiguous or silent on the standard that applies. A vendor may be technically meeting the contract while operating below what CMS expects in an ODAG audit or an OCR investigation. Second, internal monitoring that was driven by Stars reporting cadence may not have a replacement mechanism. Without Stars weight creating quarterly reporting incentives, the oversight loop weakens at exactly the moment CMS’s audit exposure remains constant.

The practical action is a targeted FDR agreement review, not broad, but focused on the specific agreements most likely to contain Stars-anchored language. For every active delegation agreement in the appeals, grievance, care management, call center, and pharmacy benefit management areas, compliance teams should ask two questions: Does this agreement reference Stars measures by name as the performance standard? If the Stars measure is removed, does the underlying CMS compliance requirement survive, and does the contract language reflect that survival? In nearly every case, the compliance requirement does survive. The question is whether the contract language says so, or whether it points only to a Stars measure that no longer carries enforcement weight.

Compliance and audit reference

Per-measure risk map: what survives Stars removal

The table below maps each removed measure against its post-Stars compliance and audit exposure. “Stars removal” occupies one column. Every other column covers what did not change. ODAG scope, enforcement authority, display measure status, and FDR obligations are determined by regulatory frameworks that operate independently of the Star Ratings calculation. Plans should use this as a working reference when setting monitoring priorities, reviewing delegation agreements, and establishing evidence retention schedules for removed measures.

Display measure status reflects CMS’s practice of continuing to publish certain performance data on Plan Finder and in program reports even after a measure leaves the Stars calculation. Final determination for 2028 and 2029 measures should be confirmed in CMS technical notes when published. ODAG scope reflects the CMS ODAG audit protocol as currently structured.

Sources: CMS ODAG audit protocols (CMS.gov); Title VI of the Civil Rights Act (42 U.S.C. § 2000d); Section 504 of the Rehabilitation Act (29 U.S.C. § 794); CMS Consumer Trends Monitoring documentation; CY2027 final rule preamble (Federal Register, April 6, 2026). Display measure status is pending CMS publication of 2028 and 2029 Star Ratings technical notes, plans should monitor HPMS for updates.

Sequenced action timeline

The measure removals operate on two timelines — near-term (2027 recalculation) and forward-looking (2028 and 2029 final rule removals). The October 2026 preliminary star release is the first major decision gate. The critical path runs through compliance, finance, and legal simultaneously, not sequentially.