Medicare Advantage ratings face new changes

By Jessica Parker 19/06/2026 2 min read 69 views

Federal officials recalculated the quality ratings for 2026 Medicare Advantage plans after insurers filed another legal challenge, a government memo revealed.

The Centers for Medicare and Medicaid Services (CMS) revised the star ratings system following lawsuits from health insurance companies, which claimed the original calculations were inaccurate. CMS has faced similar pressure before, including in 2022 when courts ruled the agency had made errors in its methodology.

High ratings bring significant financial rewards. Plans scoring at least four out of five stars receive bonus payments, which reached $16 billion this year—almost the entire budget of the Centers for Disease Control and Prevention and an amount that has doubled since 2020. Taxpayers fund these payments, making them a key financial incentive for insurers.

While most insurers have lost their legal battles over the ratings, a few have succeeded, creating ongoing instability. The latest recalculation shows the system remains disputed, with companies continuing to challenge how CMS assesses plan quality. The memo confirms adjustments were made for 2026 due to litigation but does not detail the specific changes.

Critics say the star ratings system lacks transparency, leaving insurers uncertain about how scores are determined. The bonuses have grown so large that lawmakers question their fairness.

The revisions introduce more uncertainty for insurers, who depend on the ratings to attract enrollees and secure funding. A single star can determine whether a company receives millions in bonuses or none. Some have reshaped their business models to meet CMS’s criteria, sometimes prioritizing ratings over other goals.

For beneficiaries, the changes may go unnoticed at first. The ratings help seniors compare plans during open enrollment, but frequent recalculations could cause shifts in which plans are labeled high-performing. This instability might complicate long-term coverage decisions.

Insurers argue the system fails to account for the difficulties of serving high-risk groups. CMS has made some adjustments, but the issue remains a major point of contention in debates over how to measure and reward health plan performance.

The memo did not name the insurers behind the latest challenge, but the pattern suggests legal disputes will continue. With billions at stake, the industry is unlikely to stop contesting the system soon. Legal battles over healthcare policies often reflect deeper tensions in how care is evaluated and funded.