CMS reworks Medicare Advantage star ratings after legal action

Bob covers the money in health care, focusing on health insurance and hospitals. His stories delve into Medicare Advantage, opaque prescription drug benefits, and how much executives actually make. He is also the author of the Health Care Inc. newsletter. You can reach Bob on Signal at bobjherman.09.

Federal officials have recalculated the quality ratings for 2026 Medicare Advantage plans, a new government memo shows. The consequential decision was prompted by yet another legal action from the health insurance industry.

Over the past few years, health insurance companies that sell Medicare Advantage plans have inundated the Centers for Medicare and Medicaid Services with lawsuits that challenged their lower star ratings, which jeopardized taxpayer-funded bonuses. Many insurers have lost their cases, but a handful have won. Two years ago, CMS had to redo Medicare Advantage star ratings after federal judges said the government erred with its original calculations.

Medicare Advantage plans that get at least four out of five stars get bonus payments. Those bonuses have ballooned to $16 billion this year — almost the entire budget of the Centers for Disease Control and Prevention and an amount that has doubled since 2020.