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Alignment Healthcare is suing CMS, claiming its 2027 Medicare Advantage star ratings were calculated unlawfully. The insurer argues CMS bypassed proper rulemaking by using "technical notes" instead of notice-and-comment procedures, violating the Administrative Procedure Act. The stakes are high — star ratings directly determine quality bonus payments and influence enrollee plan choices.
Alignment Healthcare has filed a federal lawsuit against the Centers for Medicare & Medicaid Services (CMS), alleging that its 2027 Medicare Advantage (MA) star ratings were determined "in flagrant violation" of statute. The insurer contends that CMS bypassed the traditional rulemaking process — which requires public notice and comment — by instead issuing key metric specifications through informal "technical notes," a move Alignment says violates the Administrative Procedure Act.
The lawsuit follows a string of legal setbacks for CMS. A Georgia federal court previously sided with Clover Health, tossing 20 metrics used in the 2026 star rating calculations. CMS recalculated scores but only removed the 10 measures deemed outside its authority — a methodology it carried forward into 2027, which Alignment argues is still unlawful. The Trump administration has appealed the Clover ruling, keeping that legal battle alive.
The financial fallout for Alignment has been significant: just 25% of its members are now enrolled in plans rated four stars or higher for 2027, down from 100% the prior year, triggering a sharp (though partially recovered) drop in share price.
By the Numbers:
Why it matters: Star ratings aren't just a scorecard — they determine quality bonus payments to insurers and help beneficiaries choose plans. Ongoing legal challenges to CMS's methodology could reshape how MA plans are evaluated and compensated across the board.
