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Health Affairs This Week places listeners at the center of health policy’s proverbial water cooler. Join host Jeff Byers, editors from Health Affairs Publishing, and guests as they discuss health policy’s most pressing news and trends.
Hello, and welcome to Health Affairs This Week. I am your host, Jeff Byers. We are recording on 08/18/2026. Today on the program to discuss a recent court decision and its impacts on the Medicare Advantage Quality Bonus program, we have Erica Socker from Georgetown University. Erica, welcome to the program.
Erica Socker:Thank you. I'm really happy to be here. Thanks for having me.
Jeff Byers:Yeah. Yeah. So, Erica, you and your colleague Katie Keith, a friend of the pod, recently wrote about a lawsuit involving Clover Insurance Company and CMS for ForaFront. So for those that might not be aware of what this lawsuit and case is, you know, can you briefly explain the Clover decision?
Erica Socker:Sure. So the Clover case is fundamentally about the star ratings in the Medicare Advantage program. And what those are, they're quality scores that get assigned to Medicare Advantage plans. And they measure various aspects of quality, like administrative effectiveness of the plan, care quality, or people getting the preventive screenings that are recommended, and different aspects of beneficiary experience. And they matter for plan payments and for Medicare spending because those star ratings serve as the basis for quality bonus payments that plans can receive.
Erica Socker:And so back in the fall, Clover sued the Center for Medicare and Medicaid Services, CMS, alleging that their star rating was lower than it should have been, and that that was costing the plan about a 120,000,000 in quality bonus payments for next year. Earlier this summer then, there was a federal district court decision in that case, and the judge ruled in favor of Clover and threw out 20 quality measures that CMS had been using in calculating Clover's star rating. And there were two legal arguments this that matter. One is that CMS had exceeded their statutory authority by drawing on measures that are not explicitly named in the statute and that were not collected for the purposes of the quality bonus program. Then the second argument was really more procedural and about whether or not CMS followed the appropriate rulemaking process in including certain measures.
Erica Socker:As a result of this Clover decision, CMS had to recalculate Clover's star rating, and that boosted their rating from 3.5 to 4.5 stars, and this is on a scale of one to five. And it means that they'll get higher bonus payments next year as a result of all of this.
Jeff Byers:Yeah. And, they Clover was asking for four or something along those lines. So they got a higher rating. Is that right? Than they even asked for?
Erica Socker:Yeah. That's, yeah, that's exactly right. So they had said in their complaint that they initially filed that they thought they should get a four star rating instead of a 3.5 star rating. But then when CMS did the recalculation, it actually ended up being a 4.5 star rating. So even more than they expected.
Jeff Byers:Gotcha. Thanks for that. And so going to the quality measures, you know, related to the star ratings program, Have you seen that these quality measures like, in in my view, again, I'm, not an expert in this field. I just host a podcast. You know?
Jeff Byers:I'm just a guy with a microphone. Have these quality measures, like, gone through reforms over the past couple of years?
Erica Socker:CMS has made various reforms, including in the rulemaking cycle just earlier this year. They made some changes to the measures that will be included in the star ratings beginning in a couple of years. But we haven't really seen major legislative reforms to the star ratings program since the ACA, which is where the star ratings were first tied to quality bonus payments in Medicare Advantage. Think there's just to provide a little bit of context, the quality bonus program is now a $16,000,000,000 a year program. That's how much it's estimated to cost in 2026.
Erica Socker:And over the years, researchers, policy experts, med packs, think tanks, like a number of people have raised concerns about whether the star ratings and the quality bonus program are achieving their objectives, and the evidence is pretty slim on that. And so there have been concerns raised about whether or not the star ratings effectively reflect quality of plans and are kind of measuring that in a meaningful way, whether the star ratings provide useful information to beneficiaries when they're selecting a plan, and whether or not tying them to quality bonuses actually incentivizes plans to improve quality.
Jeff Byers:Yeah. Coming up from, like, Clover's perspectives, I guess I'm just wondering, do insurers feel like they have enough to know how to get a certain star rating? Is like, was this was this lawsuit based on, like, they felt like the goalposts were moved or something along those lines?
Erica Socker:What I can say is that plans have raised some concerns over the years that the star ratings are not very predictable and that there's a fair amount of instability in the star ratings from year to year. I think given the Clover decision, I would expect even potentially more instability and uncertainty going forward, just because there's a number of things that we don't know at this point. So the Clover case narrowly was about Clover star rating, but CMS in response to that decision then went ahead and voluntarily made changes to other plan star rating for a single year as well. When they did that, they were really careful to say, this is not a signal of our policy direction going forward. This is just for this single year.
Erica Socker:But I think it's kind of an open question of whether we'll see more reforms from CMS on the star rating side. The other thing we don't know is that all this litigation, Clover, and then there's some other cases as well, they're still playing out. And so CMS has appealed the the Clover decision at this point, and we don't really know how these cases will eventually resolve. And depending on whether the Clover decision is upheld or not, it might affect how much flexibility CMS ultimately has to reform the star ratings program in a way that they might want to. And then I think the other point of uncertainty is just whether or not Congress might do something on the quality bonus reform side, potentially in response to to Clover, just because they see that as an area potentially where that needs reforms in the Medicare Advantage program.
Erica Socker:One thing that's a little different about the Clover case relative to other star ratings cases is that it's actually a successful challenge of CMS's statutory authority. And so other star ratings cases were mostly about how CMS applied the star ratings methodology, but they didn't challenge CMS's authority to kind of select measures and include certain measures in the star ratings. And so, like I said, depending on how all that eventually shakes out, it could affect how much CMS's hands are tied in reforms and how much flexibility they have.
Jeff Byers:So following the ruling, did CMS issue some guidance, is that my understanding, based on the Forefront article? You know, what it if so, you're shaking your head, yes, people can't see you. So, what did that guidance entail?
Erica Socker:Yeah. That's exactly right. So CMS voluntarily decided to recalculate Medicare Advantage star ratings for 2026 as a result of the Clover decision, and this is consistent with something they had done in response to a star ratings case a couple of years ago as well. I think a couple of wrinkles to know about the guidance. One is that they recalculated ratings for all MA plans, but they only use the new ratings for plans that will see an increase in their star rating as a result of the recalculation and that will get higher quality bonus payments as a result of that.
Erica Socker:So there's no decreases for everyone for for for any plan. The plans that, would have seen a decrease are held harmless. The other wrinkle is that when CMS went through and did the recalculation, they didn't use the exact set of quality measures that they used in recalculating Clover's star rating. And so they threw out some of the measures that the court had said were invalid. They kept some of them that the court said was invalid, and then they chose to include some additional star measures and what they excluded from the star ratings as well.
Erica Socker:And so you have a situation where, you know, different plan star ratings are based on different sets of measures depending on whether it was CMS's recalculation under this guidance, whether it was Clover, or whether it was just their star rating before the recalculation at all.
Jeff Byers:Yeah. And everyone knows that usually goes pretty well when you're having different measures for different organizations. So one of the things I wanted to ask you about this, so it sounds like the insurers are gonna get some more money, which I'm sure stakeholders and investors are are happy about that, about potential returns on their stocks investments. But one thing I have to wonder is, like, does this just add, you know, to the national health spending bill overnight? You know, like, how from a health spending perspective, like, what should we expect here?
Erica Socker:It will definitely increase the quality bonus payments for 2027. And I think going back to the broader context here, you know, the quality bonus program, as I said, is is expected to cost 16,000,000,000 in this year. And I think there is a risk that we end up with a less meaningful measure set and have, at the same time, even more money going out the door for these quality bonus payments. But a number of people have already raised concerns about, kind of whether we're getting what we should be for what we're paying, and there's kind of uncertain value attached to the quality bonus program based on the evidence.
Jeff Byers:Yeah. When you say a meaningful measure set, what might that actually mean?
Erica Socker:Sure. So meaning so I think, actually, there's not a lot of consensus at the moment about what a meaningful measure set would look like. And I think as we think about potential reforms to the star ratings measures and to the quality bonus program, there's a lot of agreement on certain things. There's broad agreement that the current measure set probably doesn't reflect quality as well as it could. There's room for improvement.
Erica Socker:But what to do differently is something that I think still needs some discussion. There are some proposals that would move in the direction of focusing more on clinical outcomes measures and not having as many process measures and as many measures around like kind of administrative functions of the plan included in the star rating set. There are other people that would go in a slightly different direction and include maybe more administrative types of measures, more measures that capture beneficiary experience. So this would be things like right now, there's not a good measure of prior authorization and claims denials, for example, that gets factored into the star ratings. But that might be something that if you're a Medicare beneficiary and you're trying to compare plans, you're trying to select a plan that meets your preferences, that's potentially a really salient issue for you.
Erica Socker:And so there are some measures like that that are not currently included that people have called for including in the star ratings.
Jeff Byers:So when we think about the star rating and the bonus program, you and Katie wrote about what policymakers might need to rethink this program. So a, you know, how likely is it to be reformed? B, we don't assume people read the article on this podcast. Like, tell us what you think.
Erica Socker:Yeah. I'll maybe start with the second part of your question. I think it's useful to think about potential reforms to the quality bonus program in terms of what is the program actually trying to do. And it really has two intended objectives. One is to help beneficiaries compare and select a plan.
Erica Socker:So are we giving beneficiaries the information they need to do that? And then the second thing that's intended to do is by tying the star ratings to quality bonus payments, it's trying to incentivize plans to improve their quality. And I think you can kinda separate and think about those issues a little separately. That was not the most articulate.
Jeff Byers:That was great.
Erica Socker:Okay. We can
Jeff Byers:You hear me? I I say silly stuff all the time.
Erica Socker:But what you said
Jeff Byers:was not silly.
Erica Socker:So we can think about reforms to the quality bonus program along the lines of what it's actually intended to do. And so it's intended to help beneficiaries compare and select a plan. So one question is, is it providing useful information to beneficiaries in that process, and can we make the information more useful for them? I think the other thing it's trying to do is in tying the star ratings to the quality bonus payments, that's intended to incentivize plans to improve their quality over time. If we think about kind of the second piece, a number of experts have suggested reforms that range from moving to a budget neutral quality bonus program where you would redistribute, kind of payments across high performing and low performing plans, but it wouldn't add any additional payments to the Medicare Advantage program.
Erica Socker:So that's a difference from the current program. And then some people along those lines have suggested just eliminating the quality bonus program outright. And I think part of what's motivating that and where that comes from is this bigger issue about what's called pay for performance programs and the Medicare program and whether or not they're effective. And I think there's kind of a little bit of increasing skepticism around the effectiveness of pay for performance programs. There's not a lot of evidence that they work, that they actually lead to quality improvements.
Erica Socker:And it turns out it's pretty tricky to design those in a way that makes sense. And so some people, like I said, would just kind of do away with the quality bonus payments altogether. And then a second way to think about reforms is what information do beneficiaries actually need to choose plans? And I think this gets back to your question about what a meaningful measure set looks like. And so we talked already about, do you want more clinical outcomes measures?
Erica Socker:Do you want more of these beneficiary experience and plan administrative measures? Do you want to include things like prior authorization and claims denials in it? I think the other piece of this where there is a lot of consensus is moving to more of a local plan market level quality score. Right now, the quality is assessed at a Medicare Advantage contract level, but contracts can cover a number of different Medicare Advantage plans. They can span multiple states.
Erica Socker:They can span plans that have different provider networks that enroll different segments of the Medicare Advantage population. And so if we're thinking about the star ratings as something that's intended to be useful to beneficiaries, that score doesn't necessarily reflect very well the quality of the plan that the beneficiary is actually considering enrolling in. So moving from a contract level assessment of quality to a plan level assessment of quality is something where there's been a fair amount of agreement over the years. On your first question, going back to that about whether or not we're likely to see reforms here, I think that's a little bit hard to say. As I mentioned, I think CMS could make additional reforms here, but there is this open question about how much the Clover decision and some of the other cases that are still pending might tie their hands and limit the flexibility they have to make reforms to the star ratings program.
Erica Socker:On the congressional side, I can say that there has been bipartisan interest in reforms to the quality bonus program over the years. It hasn't really been a left right issue. And there's bills out there from both Republican sponsors and Democratic sponsors that do contemplate pretty large scale reforms to the quality bonus program. So I think it's more of a question of as potentially interest in improving Medicare Advantage payments and the Medicare program overall for beneficiaries and for taxpayers as interest in those discussions picks up on the hill. Like, how will the quality bonus payment kinda fit into the broader context and other reforms that congress might be considering?
Jeff Byers:So final question, you know, any any last words on the program or, you know, that listeners should be aware of as we as we close out?
Erica Socker:I think just to sum up, the the Clover case really illuminates some of the issues with the quality bonus program and some of the structural concerns that researchers, policy experts, think tanks, and others have raised for a number of years going back to before the Clover case was a thing. I think it it does also create, as we were talking about, a lot of uncertainty about what the star ratings actually look like going forward. That creates a lot of instability for for plans too, because this does have financial implications for them and has financial implications for the Medicare program. So I think it'll be interesting to watch how policymakers, both CMS and Congress, potentially respond to to this over the next year or two, and what options are actually available to CMS in terms of how they can respond depending on how the cases play out.
Jeff Byers:So potentially small but potentially mighty case that has potentially larger effects. Time time will tell. Erica Socker, thank you again for joining us today on Health Affairs This Week. If you, the listener, enjoyed this episode, send it to a friend, and we'll see you next week.