Medicare Advantage (MA) insurer Alignment Healthcare scored a partial victory in its longstanding lawsuit over 2025 star ratings with the Centers for Medicare and Medicaid Services (CMS).
The health plan said recent court rulings have increased its star ratings from 3.5 to 4.0 stars for Arizona HMO plans, meaning all Alignment members are in plans four stars or higher.
“We are pleased the court validated our position,” said Dawn Maroney, president of Alignment Healthcare and CEO of Alignment Health Plan, in a July 8 news release. “This result allows us to deliver even more value to our members and provider partners—advancing our ability to do Medicare Advantage right.”
In a ruling (PDF) before the U.S. District Court for the District of Columbia June 9, the judge vacated the company’s star ratings for one plan because CMS included two appeals deemed arbitrary and capricious. The insurer challenged three plans’ ratings and CMS’ methodology for calculation, hoping for expedited judgment before 2026 bid proposals.
The judge ruled against the company’s claims the federal agency’s use of the Tukey Outlier Rule—designed to reduce statistical anomalies—was unfair. The judge also ruled against claims that the agency used “low-reliability enrollee survey data," ignored data that Spanish-speaking participants received English-language surveys and that CMS oversampling of enrollees disadvantaged smaller insurers.
Alignment appealed these elements of the decision July 1. In January, the company argued in its initial complaint the Tukey calculation was based on “objectively bad data science.” The health plan also took issue with the role of Maximus, an independent review entity, but the court did not take a stance on the contractor’s role.
Based on the new CMS calculation, Alignment will earn larger bonus payments and achieve higher scores on quality measures. The insurer serves 217,500 members across five states, including California, where the company is based.
“Our Arizona members can now have even greater confidence that they are enrolled in one of the highest-quality plans available in the state,” said John Kao, founder and CEO of Alignment.
Many household health plan names have sued the CMS over star ratings, often successfully. Most recently, however, a district court rejected a claim from Blue Cross and Blue Shield of Florida that the insurer received an unfair score outside of its control due to extreme environmental circumstances.