Alignment Healthcare Files Lawsuit Challenging Medicare Advantage Star Ratings
The insurer claims the agency violated federal rules when calculating quality scores for 2027 plans.
14 Oct 2026 0 reads Compiled with AI
#Alignment Healthcare #CMS #Medicare Advantage
Alignment Healthcare filed a lawsuit against federal regulators to challenge its Medicare Advantage quality scores for 2027. The insurer brought the complaint to a District of Columbia federal court on Friday, shortly after the Centers for Medicare & Medicaid Services released the ratings. It claims the agency violated the Administrative Procedure Act, which requires public notice before changing rules.
The dispute centers on significant financial stakes and reputational damage for the California-based plan. According to the complaint, the drop in scores will cost Alignment more than $200 million in payments for 2028. The company says it suffered losses as regulators assessed its plan quality using disputed methods.
Reports differ on the exact starting percentage of members in high-rated plans last year. Healthcare Dive states that 98 percent were in four-star or better plans in 2026 while Fierce Healthcare cites 100 percent. Both agree only 25 percent remain in those plans for the current ratings cycle.
Alignment argues that CMS used technical notes instead of the traditional rule-making process to set key measures. The company says Congress requires these measures be promulgated by regulation to ensure consistent application. Regulators have been accused of moving goalposts for achieving high scores, adding to scrutiny of the system.
Legal precedents from recent months inform this challenge, including a Georgia court decision regarding 2026 ratings. That judge found some measures exceeded the agency's authority and others were procedurally invalid. CMS recalculated scores after that ruling but kept certain contested measures for most insurers.
The company asked for a recalculation without the disputed measures before scores were released on Oct. 8, but regulators denied the request. Shares fell after the ratings came out, though prices later recovered from the drop. Alignment says it will present its case to ensure the program operates as Congress intended.