Introduction
Centene Corporation, one of the largest players in the Medicare Advantage market, has recently taken legal action against the Centers for Medicare & Medicaid Services (CMS) over its 2025 star ratings. The dispute centers on the interpretation of a secret shopper call, which Centene claims was unfairly scored and significantly impacted their overall rating. As other major insurers, including UnitedHealth and Humana, also file lawsuits over star ratings, the legal landscape around CMS’s rating system is heating up. Here’s what you need to know about Centene’s lawsuit, the financial stakes, and how it affects the Medicare Advantage landscape.
Overview of Centene’s Lawsuit Against CMS
Background on Medicare Advantage Star Ratings
Medicare Advantage (MA) star ratings are critical for insurers, influencing revenue, funding opportunities, and enrollment attractiveness. These ratings, which range from one to five stars, are determined by various factors, including customer service, health outcomes, and quality of care. A higher star rating can enhance an MA plan’s reputation and increase funding from the Centers for Medicare & Medicaid Services, while a lower rating may limit incentives and reduce competitive appeal.
Alleged Impact of the Secret Shopper Call
Centene’s lawsuit revolves around a specific phone call conducted by a CMS “secret shopper” as part of a routine survey to evaluate customer service. According to Centene, the call was incorrectly categorized as a failure due to a technical issue with CMS’s own software. The lawsuit, filed in the U.S. District Court for the Eastern District of Missouri, claims that Centers for Medicare & Medicaid Services misattributed the failure of the call to Centene, despite evidence showing that the issue originated from the CMS secret shopper’s software.
In the lawsuit, Centene argues that this single unsuccessful call has cost them a five-star rating, which in turn affects revenue and Medicare Advantage contract eligibility. The insurer estimates this issue will lead to a loss of $73 million in gross revenue.
Financial Implications of the Lawsuit
Revenue Loss Estimates Due to Lower Star Ratings
The stakes for Centene are high. Losing a five-star rating can significantly impact an insurer’s financial performance, as it limits eligibility for bonus funds, value-based insurance design (VBID) benefits, and broader funding. According to Centene, the lower star rating caused by this single call failure could cost the company $73 million in lost revenue, a substantial setback in an increasingly competitive Medicare Advantage market.
Centene’s Current Star Rating Performance
Centene’s Medicare Advantage plans saw an overall decline in star ratings for 2025. Their average rating fell from 3.89 in 2022 to 3.15, with several plans scoring below the minimum three-star threshold required for VBID eligibility. Additionally, seven Centene plans received lower overall star ratings, and four contracts saw declines in their Part D summary ratings. This decline places Centene in a challenging position among competitors, affecting its revenue, customer perception, and appeal to beneficiaries.
Legal Landscape and Other Insurer Actions
Similar Lawsuits from UnitedHealth, Humana, and Others
Centene is not alone in its grievances with CMS’s 2025 star ratings. UnitedHealth Group and Humana have also filed lawsuits over perceived unfair scoring, citing similar secret shopper call issues. Like Centene, UnitedHealth argued that a single failed call should not impact its star ratings, while Humana reported that three calls were unfairly evaluated. Both companies suggest that CMS’s methodology lacks transparency and imposes penalties for factors beyond their control.
This wave of litigation follows successful appeals from SCAN Health Plan and Elevance Health over their 2024 star ratings. In those cases, CMS recalculated ratings, encouraging other insurers to challenge the agency’s assessment criteria and possibly influencing the recent lawsuits from Centene, UnitedHealth, and Humana.
CMS’s Response and Quality Standards
CMS has maintained that the star rating system is designed to promote quality improvement and that the highest ratings are meant to be challenging to achieve. By rewarding plans that excel in customer service, clinical outcomes, and quality of care, CMS aims to foster a competitive environment where plans are incentivized to improve continuously.
Despite CMS’s stated objectives, Centene and other insurers argue that the system has flaws. The heavy weighting of customer service metrics, such as call performance, may unfairly disadvantage insurers when technical errors occur. Centene’s lawsuit sheds light on the growing tension between CMS and Medicare Advantage providers over the role and transparency of these star ratings.
Conclusion
Centene’s lawsuit against CMS underscores the crucial role that star ratings play in the Medicare Advantage landscape. As more insurers voice concerns over the rating system’s fairness and transparency, the dispute between CMS and Medicare Advantage providers grows more complex. For Centene, this legal action is not just about rectifying a single call failure; it represents a broader challenge to the rating system’s current structure. As the healthcare industry watches this lawsuit unfold, the case could prompt CMS to reassess its evaluation criteria, balancing quality incentives with operational realities in Medicare Advantage.
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Frequently Asked Questions (FAQs)
1. Why are Medicare Advantage star ratings important for insurers?
Ans: Star ratings influence Medicare Advantage insurers’ ability to attract beneficiaries, receive bonus payments, and participate in incentive programs. Higher ratings are associated with better financial performance and increased competitiveness, while lower ratings can reduce these opportunities.
2. What is a CMS secret shopper call?
Ans: CMS secret shopper calls are part of an evaluation process where CMS representatives anonymously contact health plan customer service to assess call response times, quality of assistance, and overall service. These calls contribute to the star rating calculation for customer service metrics.
3. How did the secret shopper call impact Centene’s star rating?
Ans: Centene argues that a technical failure on the CMS secret shopper’s end led to an unfairly negative rating for their customer service, affecting their overall star rating. This lowered rating impacts eligibility for bonus payments and limits Centene’s ability to offer enhanced benefits to members.
4. Are other insurers challenging CMS over star ratings?
Ans: Yes, UnitedHealth, Humana, SCAN Health Plan, and Elevance Health have also challenged CMS’s star ratings. These insurers argue that factors beyond their control, such as call failures or outdated assessment methods, have unfairly impacted their scores.
5. What outcome is Centene seeking from its lawsuit?
Ans: Centene seeks to have its star rating reconsidered, specifically asking the court to disregard the secret shopper call due to the CMS software error. A favorable outcome could lead to recalculated ratings and potentially restore Centene’s eligibility for certain Medicare Advantage bonuses and benefits.
