Elevance Health Lawsuit Slams Medicare Advantage Star Ratings Calculation

Elevance Health has filed a lawsuit against the Department of Health and Human Services (HHS), alleging its methodology for determining Medicare Advantage star ratings is unlawful.

The payer and its affiliated entities filed the complaint against HHS Secretary Xavier Becerra and CMS Administrator Chiquita Brooks-LaSure in the United States District Court for the District of Columbia. The plaintiffs have stated that the methodology changes violate the Administrative Procedure Act.

CMS calculates Medicare Advantage star ratings by assessing quality measures in five categories: member experience with the health plan, customer service performance, member complaints about the health plan, chronic condition management, and beneficiary health while enrolled in the plan.

A plan’s star rating can impact health plans operationally and financially. If a plan receives at least a four-star rating, it can receive quality bonus payments. On the other hand, plans that receive a rating lower than three stars for three years in a row are flagged as low-performing.

CMS calculates cut points for certain individual measures to determine the score a plan receives on that specific measure. The agency cannot increase or decrease cut points by more than 5 percent each year.

As finalized in 2020, CMS used the Tukey method to determine 2024 star ratings, in which it removed outlier contract scores to avoid influencing cut points. This will likely make it more difficult for plans to earn high overall ratings, as most outliers are on the lower end, and removing them will shift cut points to a higher range.

Elevance Health has argued that the Tukey method does not consider the 5 percent guardrail for cut points and CMS violated the guardrail regulation when determining 2024 star ratings.

“Despite that unambiguous and clear regulatory obligation, CMS set cut points for 2024 Star Ratings that exceed the 5% guardrail—causing a dramatic downward shift in Star Ratings across the industry and with respect to Plaintiffs specifically,” the lawsuit stated. “Defendants’ action is directly contrary to the law and arbitrary and capricious.”

The lawsuit noted that the number of five-star plans dropped from 57 in 2023 to 31 in 2024. In addition, the average Medicare Advantage-prescription drug star rating fell from 4.14 to 4.04. Elevance Health said three of its largest contracts fell below four stars after CMS used the new methodology, meaning the payer missed out on quality bonus payments.

The lawsuit also raised an issue about the quality measure D01: Part D Call Center – Foreign Language Interpreter and TTY Availability. CMS conducts secret shopper calls to health plans to score this measure, which is the number of completed contacts with the interpreter and teletypewriter (TTY) divided by the number of attempted contacts.

For the 2024 star ratings, plans could only achieve a five-star score for quality measure D01 if 99 percent or more of the secret shopper calls were considered successful. Elevance Health said that, given the number of CMS secret shopper calls conducted among its health plans, it was mathematically impossible to achieve a 99 percent score. According to the lawsuit, the payer’s affiliates had a success rate of 98.4 percent.

The complaint alleges that CMS incorrectly concluded that it missed one call, leading the plan to fall short of a five-star rating. Elevance Health further stated that there is no evidence that the call ever connected CMS with the payer’s call center.

The plaintiffs have asked CMS to declare that the 2024 star ratings were incorrectly calculated and redetermine the scores and bonus payments.