Alignment Healthcare files lawsuit against CMS over 2027 Medicare Advantage star ratings
Alignment Healthcare sued the Centers for Medicare & Medicaid Services in Washington, D.C., claiming the agency’s 2027 star‑rating methodology violated the Administrative Procedure Act. The insurer says its share of members enrolled in plans receiving four‑star or higher ratings dropped dramatically, from full coverage the prior year to only a quarter of its members. Alignment seeks a court ruling by May 2027 and argues the ratings caused financial and reputational harm. The case comes after a similar court decision against CMS in the Clover Health lawsuit.
Why it matters
A TD Cowen analyst estimates the rating decline could cut Alignment’s 2028 revenue by more than $170 million, reflecting the loss of quality‑bonus payments tied to star ratings. The lawsuit also highlights regulatory risk for Medicare Advantage insurers if star‑rating methods are challenged.
Key facts
- 1Alignment filed the suit on Friday, Oct. 9, 2026, in federal court in Washington, D.C. fiercehealthcare.com
- 2The company alleges CMS used "technical notes" instead of formal notice‑and‑comment rulemaking, violating the Administrative Procedure Act. fiercehealthcare.com
- 3Alignment reports that only 25% of its members are now in plans rated four stars or higher, down from 100% the previous year. medicaldaily.com
- 4The insurer covers about 280,000 members across California, Arizona, Nevada, North Carolina and Texas. medicaldaily.com
- 5A TD Cowen analyst projected a potential revenue loss of over $170 million for 2028 due to the lower star ratings. medicaldaily.com
- 6Alignment’s shares fell more than 20% after the ratings were released. medicaldaily.com
Summary written by AlphAI AI Desk from 2 of 2 sources. Not investment advice. Figures are as stated by the linked sources.