Clover Health Decision Raises Significant Questions for CMS Star Ratings Framework

On May 27, 2026, Judge Wood (S.D. Ga.) issued a summary judgment decision in Clover Ins. Co. v. Dep’t of Health and Human Servs., 2:25-cv-00142 (S.D. Ga.) addressing the methodology used by CMS to calculate Medicare Advantage Star Ratings. The decision evaluates the legal basis for certain measures included in CMS’s Star Ratings framework and, as applied to the plaintiff, directs CMS to recalculate Clover’s Star Ratings by specifically excluding certain challenged measures from consideration.¹

Although the ruling is limited to Clover, it could have broader implications for Medicare Advantage (MA) plans and the administration of the Star Ratings program. Star Ratings are intended to (1) provide Medicare beneficiaries with quality and performance information to assist them in selecting a health plan and (2) incentivize plans to furnish high-quality health care services. Star Ratings also play a significant role in plan payments and operations, as they affect Quality Bonus Payments, benchmarks, and marketing activities. In addition, plans that receive ratings below three Stars for three consecutive years may be subject to contract termination. Accordingly, any changes to the underlying methodology could have meaningful financial and operational consequences for affected plans.

While Judge Wood’s decision is limited to the specific plaintiff — Clover — that challenged its own Star Rating, her ruling offers a legal blueprint to any other plan that seeks to challenge its Star Rating. And, based on Clover’s success before Judge Wood, other Medicare Advantage organizations may consider similar challenges. While CMS could preempt such litigation by not only accepting Judge Wood’s ruling, but voluntarily applying its principles to other MA plans, CMS may also choose to appeal Judge Wood’s decision to the Eleventh Circuit.

Key Aspects of the Court’s Ruling

The Court accepted two key legal arguments advanced by Clover concerning CMS’s methodology.

First, the Court concluded that certain measures used by CMS were not authorized under the relevant statutory framework. Specifically, the Court determined that CMS may base its quality rating calculations only on measures derived from data collected under 42 U.S.C. § 1395w-22(e), which governs the MA quality improvement program. In the Court’s view, this limitation confines permissible data sources to HEDIS, HOS, and CAHPS (and even certain CAHPS data should be excluded, according to the Court). Based on this interpretation, the Court excluded ten measures that it determined were not based on such data.

Second, the Court held that CMS did not comply with applicable notice-and-comment rulemaking requirements with respect to certain measures included in the Star Ratings calculations. The Court found that the applicable statutory law required CMS to engage in notice-and-comment procedures before adopting these measures and concluded that the agency’s failure to do so rendered those measures procedurally invalid as applied to Clover. This determination invalidated an additional ten measures (and served as an alternate basis for rejecting the first ten measures).

Scope and Limitations of the Decision

The Court did not fully adopt all of Clover’s arguments. Notably, it rejected Clover’s contention that CMS is limited to survey questions as they existed in 2003. Instead, the Court held that while CMS must continue to rely on the same general data systems in place as of November 1, 2003 (HEDIS, HOS, and CAHPS), the agency retains discretion to modify the specific survey questions within those systems over time. This aspect of the decision preserves a degree of flexibility for CMS in administering its programs.

Significantly, the ruling applies only to Clover and does not constitute governing precedent for any challenges brought beyond this particular case. Nevertheless, the Court’s reasoning may be considered persuasive authority in future disputes involving similar issues.

Potential Implications

The decision may prompt increased scrutiny of CMS’s Star Ratings methodology, particularly with respect to the statutory basis for certain measures and the procedures used to adopt them. Other Medicare Advantage organizations may evaluate whether the issues identified in this case are relevant to their own Star Ratings and consider potential responses, including administrative or judicial challenges.

At the same time, the ultimate impact of the decision remains uncertain. CMS may seek appellate review, and a higher court could affirm, modify, or reverse the district court’s ruling. It is also possible that a different district court in a separate case could arrive at the opposite conclusion. In addition, CMS will likely consider whether and how to address the issues identified by the Court through regulatory or sub-regulatory action.

Takeaways

• The decision directs CMS to recalculate Clover’s Star Rating without certain measures the Court found inconsistent with statutory and procedural requirements.
• The ruling identifies limits on the types of data CMS may use in Star Ratings calculations and emphasizes the importance of notice-and-comment rulemaking.
• While limited to the plaintiff, the decision may inform how other stakeholders assess CMS’s Star Ratings methodology.
• The case is subject to potential appeal, and its broader significance will depend on future judicial and agency developments.

Stakeholders should monitor further developments in this case, as well as any related litigation or regulatory responses, to assess potential implications for MA plan operations and compliance strategies.

¹ Specifically, the measures that the Court determined that “CMS erroneously applied in determining Clover’s 2026 Star Ratings” were: (1) Medication Adherence, Diabetes (D08); (2) Medication Adherence, Hypertension (D09); (3) Medication Adherence, Cholesterol (D10); (4) Phone Call Center (C33); (5) Phone Call Center (D01); (6) Appeal Decision (C32); (7) Rating of Drug Plan (D05); (8) Getting Needed Drugs (D06); (9) Medication Therapy Management Completion (D11); (10) Pharmacy Statin Use (D12); (11) Improving Mental Health (C05); (12) Reducing Falling (C15); (13) Getting Needed Care (C22); (14) Rating of Health Care Quality (C25); (15) Care Coordination (C27); (16) Improving Bladder Control (C16); (17) Annual Flu Vaccine (C03); (18) Improving Physical Health (C04); (19) Getting Care Quickly (C23); and (20) Customer Service (C24). 

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