Centene Joins Alignment in Suing CMS Over 2027 Medicare Advantage Star Ratings

Centene has become the second major insurer in two weeks to take the federal government to court over its Medicare Advantage star ratings. The lawsuit, filed Thursday in Georgia's Southern District Court, follows a nearly identical complaint from Alignment Healthcare filed Oct. 9 in D.C. federal court. Both companies argue CMS violated the Administrative Procedure Act in calculating scores that determine hundreds of millions of dollars in quality bonus payments.

The stakes are not abstract. Star ratings dictate how much insurers receive in bonus payments from CMS, and they shape how enrollees and brokers evaluate competing plans. A one-star swing can mean the difference between a thriving book of business and a shrinking one. That reality is now driving insurers into court rather than simply absorbing the hit.

Centene's complaint centers on 17 measures it says CMS deployed improperly, violating what the company calls "core statutory safeguards." For the 2027 plan year, just 9% of Centene's Medicare Advantage members are enrolled in plans rated four stars or higher. That is down sharply from 18% the prior year. Centene estimates that removing the 17 contested measures would have netted it $448 million more in quality bonus payments for the 2028 plan year, money it says would go toward richer benefits, lower premiums and better care coordination.

Alignment's numbers tell an even starker story. Just 25% of its members sit in four-star-or-better plans for 2027. A year earlier, that figure was 100%. Shares in the company dropped on the news before partially recovering. Alignment argues CMS "completely departed from Congress's vision" of using predictable, validated measures built with input from providers, plans and the public, instead relying on a series of informal "technical notes" to define key metrics rather than going through formal rule-making.

The Clover Precedent

Both lawsuits lean heavily on a ruling earlier this year in favor of Clover Health. A Georgia federal judge found that CMS exceeded its authority on 10 measures used in 2026 star ratings calculations and improperly promulgated 10 others, for a total of 20 measures set aside. CMS recalculated scores across the industry following that decision, but limited the adjustment to only the 10 measures the court said exceeded the agency's authority, leaving the other 10 intact.

That partial fix is now the crux of the dispute. Alignment contends CMS maintained the same narrow approach in setting 2027 ratings, ignoring the broader implications of the Clover ruling. Centene is making a parallel argument, pointing to CMS's own acknowledgment that courts have already sided with insurers on similar grounds. The Trump administration has appealed the Clover decision, so the underlying legal question of how far CMS's authority extends remains unsettled even as it ripples through two new lawsuits.

Reputational damage is a theme in both filings. Centene says "depressed ratings also inflict significant reputational damage and diminished membership," a concern that goes beyond the balance sheet. Lower star ratings can push prospective enrollees toward competitors during open enrollment season, compounding the financial hit from reduced bonus payments with a slower-burning erosion of market share.

Alignment, for its part, says the lawsuit is a continuation of its earlier legal strategy. The company had already sued CMS after the Clover ruling to secure a recalculation of its own scores consistent with that decision. In a statement to Fierce Healthcare, Alignment framed the new suit as an extension of that effort. "Our lawsuit seeks to ensure that the Star Ratings program operates as Congress intended and that Alignment is properly compensated for the care we provide," the company said, adding that it would not comment further given the pending litigation. Centene had not responded to a request for comment at the time of publication.

The broader industry context matters here too. Fierce Healthcare's recent roundup of winners and losers in the 2027 star ratings noted Humana's rebound and Aetna's slide, a reminder that ratings volatility this cycle is not confined to Centene and Alignment. Whether other insurers follow with their own legal challenges is an open question, but the pattern set by Clover, and now reinforced by two more lawsuits, suggests CMS's measure-by-measure methodology is facing sustained scrutiny rather than an isolated dispute.

The Bottom Line

CMS's star ratings program was designed to reward quality and give Medicare Advantage enrollees a clear basis for comparison shopping. Instead, it has become a recurring source of litigation, with insurers arguing the agency's methodology is inconsistent, procedurally flawed and financially punitive. Centene's $448 million estimate and Alignment's collapse from 100% to 25% four-star enrollment are not minor rounding errors. They represent real swings in bonus payments and, by extension, in the benefits insurers can offer seniors.

Investors should treat this as an unresolved risk factor rather than a one-off headline. The Clover case remains under appeal, meaning the legal foundation both Centene and Alignment are building on could still shift. If courts continue to side with insurers on procedural grounds, expect more plans to challenge their ratings rather than accept them, and expect CMS to face pressure to formalize its measure specifications through proper rule-making rather than technical notes. Until that happens, star ratings volatility looks less like a quality signal and more like a legal and regulatory wildcard embedded in MA economics.