Alignment Healthcare has sued the Centers for Medicare & Medicaid Services in D.C. district court, seeking to overturn its 2027 Medicare Advantage star ratings. The California-based insurer, which covers about 240,000 members across five states, saw the percentage of its members in plans rated at least 4 stars collapse from 98% in 2026 to 25% in 2027. According to the complaint, that drop would cost the company more than $200 million in payments in 2028, the year affected by the ratings.
The lawsuit argues that CMS's star ratings methodology is illegal because the agency did not go through formal rulemaking. Alignment specifically points to ten measures it says CMS used without promulgating them by regulation, as Congress required. The company had asked CMS on Oct. 6 to recalculate its 2027 ratings without those contested measures; CMS denied the request the next day and released the ratings on Oct. 8.
The case builds on prior legal wins for insurers. A Georgia court earlier this year ruled that 20 of CMS's star ratings measures were invalid, and CMS recalculated 2026 ratings for some plans in June. Alignment is already pursuing a similar challenge to its 2026 ratings, and its new suit says the same legal question applies to 2027. The CMS did not respond to a request for comment, and the source notes that more insurers may follow with their own lawsuits over quality scores.