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Judge sides with HHS in challenge to Elevance contract's

rating

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Elevance had said the rating cost the company $375 million

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Other insurers have sued over the 2025 ratings

By Diana Novak Jones

CHICAGO, Aug 19 (Reuters) - A federal judge in Texas on

Tuesday rejected Elevance Health's ( ELV ) challenge of the U.S.

government's calculation for the health insurer's star ratings

for some of its government-backed Medicare plans after the

company said improper rounding cost it at least $375 million.

U.S. District Judge Mark Pittman in Fort Worth, Texas, sided

with the U.S. Department of Health and Human Services after the

company sued to fight the star rating assigned to one of its

contracts, arguing the agency's calculations for the ratings

were flawed. Pittman said Elevance had not pointed out any major

problems with the calculations and that the process is too

complicated for the court to evaluate it beyond that.

Elevance, the parent of companies including Anthem Blue

Cross and Blue Shield and Carelon, provides Medicare Advantage

plans in the U.S. The plans are funded by the Medicare health

insurance program for seniors and some disabled people, but

administered by private insurers.

The U.S. Centers for Medicare & Medicaid Services, which is

part of HHS, issues star ratings for the plans, from one to five

stars, to help beneficiaries choose among them.

Plans with higher star ratings receive higher payments from

the government if they keep costs below certain targets. Those

bonus payments can be worth hundreds of millions or billions of

dollars.

Elevance had said the agency's calculations for 2025 caused

at least one of its contracts to just miss being rated at the

next higher tier, likely costing the company at least $375

million in bonus and other payments.

A spokesperson for Elevance did not immediately respond to a

request for comment. Neither did representatives for HHS.

Elevance filed its lawsuit in October, after one of its

contracts received a score of 3.749565 and was assigned 3.5

stars.

The company said CMS had not followed its own regulations

when it rounded down, and the contract should have been rounded

up to 4 stars.

HHS countered that its scoring process was sound, arguing

that if the court allowed Elevance's challenge to move forward,

it would be opening the door to yearly challenges from insurers

whose contracts just missed the cutoff for higher tiers.

The company was one of several health insurers to sue after

CMS released the 2025 star ratings.

Last month, another Texas federal judge tossed a lawsuit brought

by Humana that challenged the reduction in the health insurer's

star ratings after finding that Humana had failed to exhaust all

of its out-of-court options to challenge the ratings.