The Clover Decision Changed More Than One Plan’s Star Rating
Written by
Jenice James
Senior Product Manager
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On June 9, 2026, CMS informed Clover Health that its 2026 Medicare Advantage Star Rating was no longer 3.5 stars — it was 4.5.
One court order changed a plan’s rating by a full star, creating a significant shift in Quality Bonus Payments for payment year 2027. For Medicare Advantage organizations, the significance of that decision extends well beyond a single plan. It demonstrates that the methodology used to calculate Star Ratings can materially affect financial outcomes, and that health plans must be prepared to respond quickly when those methodologies change.
The weeks that followed reinforced that point. CMS voluntarily recalculated 2027 Quality Bonus Payment (QBP) ratings for affected contracts, reopened bid submissions for a matter of days, and held impacted plans harmless if recalculated ratings would have been lower. At the same time, CMS reserved the right to appeal the court’s decision, leaving questions about future Star Ratings and Quality Bonus Payments unanswered.
For Star Rating leaders, the takeaway is clear: uncertainty around methodology is now another variable that organizations must plan for alongside quality performance itself.
What the court actually held
Clover Health filed suit against HHS and CMS in November 2025, arguing that its 2026 Star Rating had been calculated incorrectly. On May 27, 2026, the U.S. District Court for the Southern District of Georgia agreed, concluding that CMS had improperly included 20 measures in the Star Ratings measure set.
In simple terms, the court found that the measure set should have been limited to HEDIS®, HOS, and CAHPS® measures. Pharmacy, call center, appeals, and other measures should not have been included because CMS had not followed its own regulatory process for adding or removing measures from the Star Ratings program.
The court ordered CMS to recalculate Clover’s 2026 Star Rating using only the applicable measures. When CMS complied, Clover’s overall rating increased from 3.5 to 4.5 stars.
CMS responded quickly, but the story isn’t finished
Following the court’s decision, CMS requested reconsideration, arguing that the court had overlooked part of its briefing. The court declined to modify its ruling, and CMS subsequently recalculated Clover’s Star Rating.
On June 17, CMS issued a memorandum extending similar treatment to certain Medicare Advantage contracts by voluntarily recalculating 2027 Quality Bonus Payment ratings using only HEDIS, HOS, and CAHPS measures. Part D measures, along with several Part C measures related to complaints, appeals, and voluntary disenrollment, were removed from those calculations.
Importantly, the recalculation operated in only one direction. CMS applied the revised ratings only when they resulted in a higher rating and held plans harmless when the recalculated rating would have been lower.
The operational implications were immediate. Organizations whose revised ratings changed their benchmark or rebate eligibility were given only a few days to decide whether to resubmit their 2027 bids. Plans that already understood their forecasted position were able to evaluate the impact and act within the compressed timeline. Others were forced to assess significant financial implications while working against the clock.
Several important questions also remain unresolved. CMS made clear that the memorandum applies only to 2027 Quality Bonus Payment determinations and does not address the 2027 Star Ratings that will be released later this year or future Quality Bonus Payment years. The agency has also reserved the right to appeal the court’s decision. As a result, Medicare Advantage organizations should expect continued uncertainty while monitoring future regulatory developments.
Why CMS Star Rating accuracy has become a board-level issue
While the legal questions are important, the broader business implications deserve equal attention.
Quality Bonus Payments totaled more than $13 billion in Medicare Advantage payments in 2025, making Star Ratings one of the most significant financial drivers for Medicare Advantage organizations. Achieving four stars or higher directly influences bonus payments, rebate levels, benefit design, and long-term competitive positioning.
Those financial implications become even more significant when viewed alongside current industry performance. The average Medicare Advantage Star Rating for 2026 was 3.98 stars, just below the four-star threshold that determines bonus eligibility. For many organizations, relatively small changes in methodology or measure performance can determine whether they qualify for millions of dollars in additional revenue.
Clover has publicly estimated that the recalculated rating represents approximately $120 million in additional revenue. CareFirst has publicly estimated a potential impact of roughly $32 million. Although every organization is different, both examples illustrate the same point: fractions of a star can carry substantial financial consequences.
The June 17 CMS memorandum further emphasized the importance of understanding those impacts quickly. Because recalculated ratings could only improve a contract’s Quality Bonus Payment rating, affected organizations had a limited opportunity to capture upside within an extremely compressed decision window.
That raises an important operational question: if CMS changes the methodology again, how quickly could your organization determine where it stands?
Where forecasting earns its keep
The recent CMS memorandum illustrated why forecasting has become more than an annual reporting exercise.
When CMS revised the applicable measure set and reopened bid submissions, organizations needed to understand not only their recalculated Star Rating, but also how those changes would affect benchmarks, rebates, and overall financial performance. Those analyses had to be completed in days, not weeks.
Organizations that already had confidence in their projected CMS Star Ratings were able to quickly evaluate their options. Those relying on manual analyses or retrospective reporting faced a much more difficult challenge.
When organizations have confidence in both their current performance and future projections, they are better prepared to navigate regulatory uncertainty and make informed strategic decisions.
Health plans supported by Inovalon solutions averaged 4.08 Stars in 2026, outperforming the national average of 3.98 Stars. Inovalon’s Converged Quality’sTM forecasted cut-point analysis demonstrated greater than 97% accuracy when compared with CMS-released cut points, providing predictive insights for plans to improve performance. These results reflect the value of combining accurate forecasting with comprehensive visibility into measure performance and quality improvement opportunities.
As Medicare Advantage continues to evolve, organizations will increasingly need more than retrospective reporting. They need insights that enable proactive planning before regulatory changes, bid submissions, and performance outcomes become final.
Preparing for what’s next
The Clover ruling demonstrated how quickly the Medicare Advantage Star Ratings landscape can change. Within just a few weeks, the industry saw a federal court decision, a recalculated CMS Star Rating, a nationwide CMS memorandum affecting Quality Bonus Payments, and a bid resubmission window measured in days.
Whether future changes come through additional litigation, rulemaking, or new CMS guidance, organizations will continue to operate in an environment where both quality performance and regulatory methodology influence financial outcomes.
Plans that are best positioned to navigate that uncertainty will be those that understand their forecasted performance, can model multiple scenarios with confidence, and know exactly which measures will have the greatest impact on their overall rating.
Learn how Inovalon can help your organization forecast performance, evaluate what-if scenarios, and prepare for the next evolution of the Medicare Advantage Star Ratings program.
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