Dive Brief:
A federal judge has ordered the CMS to immediately recalculate UnitedHealthcare’s Medicare Advantage star ratings for 2025 in a major win for the health insurer — and potentially the MA sector as a whole.
Early last month, a group of UnitedHealth plans sued the agency, alleging that regulators unfairly lowered their quality ratings over a single phone call to their joint customer support center. Now, the CMS must rerun and republish the ratings — without including the disputed call, which could boost UnitedHealthcare’s MA earnings by millions of dollars.
The judge’s opinion on Friday wasn’t a complete victory for UnitedHealthcare, as he did not agree that the CMS held the insurer to a different standard than competitor Elevance in reviewing its call center. Still, the ruling bodes well for other MA insurers with pending suits seeking to boost their ratings, according to analysts.
Dive Insight:
Dozens of quality, access and customer satisfaction metrics factor into a plan’s final star rating, scores that run from one to five stars and are published by the CMS in October for the following year. The CMS released ratings this fall for 2025 that had many plans up in arms, arguing regulators made point thresholds more difficult to reach. Changes to stars are big deal for insurers in the privately run Medicare program: The ratings affect how attractive a plan is for seniors, along with a plan’s reimbursement and access to lucrative bonuses.
A number of major insurers summarily sued the CMS, brandishing a variety of arguments for why their lower scores were unfair. Many took issue with how regulators assessed their customer support call centers, including litigation from UnitedHealthcare, Humana and Centene.
Now, those other cases have cause for optimism after a Texas judge sided predominantly with UnitedHealth in the healthcare behemoth’s case arguing a “secret shopper” with the CMS messed up a customer support call review.
To receive five stars on the call center measure, centers are required to provide an interpreter for foreign language speakers within eight minutes of request. The secret shopper placed a call in French, but never asked an introductory question required by CMS guidelines for assessment. As such, the call center employee did not provide the required response, even though the call center connected the test call from the CMS as required within eight minutes, according to UnitedHealth.
Still, regulators scored the affected plans four instead of five stars on the rating, subsequently reducing overall star ratings for several of UnitedHealth’s plans.
UnitedHealth argued this action was arbitrary and capricious, in violation of the Administrative Procedure Act. It also improperly delegated what should be a CMS decision — evaluating the test call — to a private contractor without authorization from Congress, according to the suit.
On Friday, Judge Jeremy Kernodle of the U.S. District Court for the Eastern District of Texas agreed. The call was marked unsuccessful contrary to the CMS’ own assessment guidelines, and it’s illegal for agencies to delegate decisionmaking to private contractors, Kernodle wrote in his opinion.
However, Kernodle broke with UnitedHealth in determining that the CMS did not hold its plans to a different standard than Elevance, which successfully sued over a similar issue with its star ratings for 2024. Elevance’s suit took issue with a phone call it says regulators should have invalidated over a technological problem.
“Comparing the calls at this level of generality could sweep in all kinds of calls that are not really similar at all — and ignores important distinctions,” Kernodle wrote in his opinion.
Still, UnitedHealth’s win should drive about $10 million in additional MA earnings, according to Leerink Partners analyst Whit Mayo. It’s a pittance compared to the Minnetonka, Minnesota-based company’s overall profits, which reached $23.1 billion last year.
Yet broadly, the decision is a “big win” for the MA sector, given it could have wider implications for how call center metrics are evaluated, Mayo said in a note on Sunday. Specifically, the ruling that the CMS unlawfully delegated key tasks to private contractors makes it more likely that other insurers like Humana with similar cases will prevail, given contractors also assessed their call centers, Mayo said.
The CMS has already moved to downgrade the importance of call center metrics in calculating final MA stars.
Elevance and Blue Cross Blue Shield of Louisiana have also sued the CMS over their 2025 star ratings. However, their cases are not centered around customer support assessments.
