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News
Alignment Healthcare is suing CMS after its 2027 Medicare Advantage star ratings nosedived — dropping the share of members in 4-star-or-above plans from 98% to just 25%. The California-based insurer argues CMS illegally set its ratings methodology through "technical notes" rather than formal rulemaking, violating the Administrative Procedure Act. The lawsuit could open the door for similar challenges from other insurers.
Alignment Healthcare has filed a federal lawsuit against the Centers for Medicare & Medicaid Services (CMS), challenging the dramatic collapse of its 2027 Medicare Advantage (MA) star ratings. The insurer — which covers roughly 240,000 members across five states — argues that CMS illegally determined key rating measures through informal "technical notes" rather than the formal notice-and-comment rulemaking process required by Congress, in violation of the Administrative Procedure Act.
The lawsuit, filed in D.C. district court one day after CMS released the 2027 ratings, asks the court to vacate Alignment's scores and force regulators to recalculate them using a legally compliant methodology before the 2028 Medicare selling season. Alignment is drawing on a recent Georgia court ruling that struck down 20 CMS star rating measures used in 2026 calculations — 10 for exceeding the agency's authority and 10 for improper promulgation — arguing CMS has continued using the same flawed measures for 2027.
By the Numbers:
Why it matters: MA star ratings aren't just a report card — they directly determine billions in quality bonus payments and shape plan competitiveness. Alignment's suit could trigger a wave of similar legal challenges, putting CMS's entire star ratings methodology under the microscope and potentially destabilizing the MA payment system.
