Alignment Healthcare Sues CMS Over Medicare Quality Scores

Alignment Healthcare is suing the Centers for Medicare & Medicaid Services (CMS) over a precipitous decline in its Medicare Advantage quality scores for 2027. The California-based insurer filed a complaint in a D.C. district court on October 13, 2026, arguing that the CMS's star rating methodology is illegal because it bypasses the required rulemaking process. This action seeks to vacate the 2027 star ratings and compel recalculations before the 2028 Medicare selling season.

The insurer experienced a sharp drop in its percentage of members in plans rated at least 4 stars, falling from 98% in 2026 to 25% in 2027. This decline is projected to cost Alignment Healthcare over $200 million in payments for 2028. The lawsuit builds on previous legal challenges where courts have scrutinized the CMS's star calculation methods, finding some measures procedurally invalid.

Alignment Healthcare alleges the CMS continues to use the same contested measures, despite ongoing legal challenges to their validity. The insurer's request to exclude these measures from its 2027 ratings was denied by the CMS on October 7, 2026, just one day before the star ratings were released. This litigation highlights growing insurer dissatisfaction with the Medicare Stars program, with concerns about shifting goalposts and potential overpayments.