Elevance Health loses bid to challenge US Medicare star ratings

By Diana Novak Jones

CHICAGO, Aug 19 (Reuters) - A federal judge in Texas on Tuesday rejected Elevance Health’s ELV.N challenge of the U.S. government's calculation for the health insurer's star ratings for some of its government-backed Medicare plans after the company said improper rounding cost it at least $375 million.

U.S. District Judge Mark Pittman in Fort Worth, Texas, sided with the U.S. Department of Health and Human Services after the company sued to fight the star rating assigned to one of its contracts, arguing the agency’s calculations for the ratings were flawed. Pittman said Elevance had not pointed out any major problems with the calculations and that the process is too complicated for the court to evaluate it beyond that.

Elevance, the parent of companies including Anthem Blue Cross and Blue Shield and Carelon, provides Medicare Advantage plans in the U.S. The plans are funded by the Medicare health insurance program for seniors and some disabled people, but administered by private insurers.

The U.S. Centers for Medicare & Medicaid Services, which is part of HHS, issues star ratings for the plans, from one to five stars, to help beneficiaries choose among them.

Plans with higher star ratings receive higher payments from the government if they keep costs below certain targets. Those bonus payments can be worth hundreds of millions or billions of dollars.

Elevance had said the agency’s calculations for 2025 caused at least one of its contracts to just miss being rated at the next higher tier, likely costing the company at least $375 million in bonus and other payments.

A spokesperson for Elevance did not immediately respond to a request for comment. Neither did representatives for HHS.

Elevance filed its lawsuit in October, after one of its contracts received a score of 3.749565 and was assigned 3.5 stars.

The company said CMS had not followed its own regulations when it rounded down, and the contract should have been rounded up to 4 stars.

HHS countered that its scoring process was sound, arguing that if the court allowed Elevance's challenge to move forward, it would be opening the door to yearly challenges from insurers whose contracts just missed the cutoff for higher tiers.

The company was one of several health insurers to sue after CMS released the 2025 star ratings.

Last month, another Texas federal judge tossed a lawsuit brought by Humana that challenged the reduction in the health insurer's star ratings after finding that Humana had failed to exhaust all of its out-of-court options to challenge the ratings.