CMS withdraws appeal of UnitedHealth’s star ratings lawsuit

Photo: Pichsakul Promrungsee EyeEm/Getty Images

The Centers for Medicare and Medicaid Services has withdrawn its appeal of a district court ruling that determined the agency must recalculate Medicare Advantage Star Ratings for UnitedHealthcare.

CMS had originally signaled its intent to file an appeal to the Fifth Circuit Court in Texas, but CMS has withdrawn its notice of appeal without providing an explanation for the change.

The agency had been appealing the November 22, 2024 order mandating CMS recalculate the MA 2025 star ratings without consideration of a secret shopper call used to determine UnitedHealth’s score.

WHAT’S THE IMPACT?

UnitedHealth won its case over lowered star ratings in October 2024 when the court ruled as unlawful CMS’s decision to include the disputed call in the 2024 Call Center Monitoring Performance Metrics for Accuracy and Accessibility Study.

UnitedHealthcare claimed that its ratings were lowered on the basis of that one phone call. A 4-star rating, rather than a 5-star rating, on this single metric, would cause them substantial losses, both financially and in the number of members signing up for plans, according to UnitedHealthcare.

The court granted in part UnitedHealth’s motion for summary judgment and denied in part its cross motion for summary judgment.

A lower star rating could lead to fewer enrollments and potentially reduce the insurer’s bonuses and payments from CMS.

Other insurers have also sued CMS over lower star rating scores. In November, Elevance sued after winning a lawsuit in June 2024 over star ratings calculations. Centene, which also sued over the call measure, said CMS held a single call against the company – one that never reached its call center. Humana also filed a lawsuit over the calculation of cut points that determine the number of stars.

THE LARGER TREND

With Medicare Advantage plans playing a central role in UnitedHealthcare’s portfolio, any change to star ratings could affect its profitability. Lower ratings may result in fewer enrollments, reduced bonuses and even customer attrition as beneficiaries look for higher-rated plans.

Last December, UnitedHealthcare set its 2024 MA enrollment predictions for less than 8.1 million this year, below market forecasts. But in its Investor Conference report, UnitedHealth said it expected its Medicare Advantage business to grow.

Medicare Advantage is serving an increasingly diverse, lower-income and clinically complex population, the company said. Seniors with chronic conditions are more likely to choose Medicare Advantage, and more than half of Medicare Advantage members have an annual income of less than $25,000. Medicare Advantage enrollment among minority populations has more than doubled since 2013, and now makes up more than 30% of Medicare Advantage membership.

Jeff Lagasse is editor of Healthcare Finance News.
Email: jlagasse@himss.org
Healthcare Finance News is a HIMSS Media publication.