Clover Health's Court Win Forces a 2027 Medicare Advantage QBP Recalculation

CMS is recalculating 2027 Medicare Advantage quality bonus payment ratings after a federal court found the agency used 20 Star Ratings measures beyond its statutory authority in Clover Health's case (S.D. Ga., May 27, 2026). Plans whose recalculated rating came out higher had until June 29 to resubmit their 2027 bids, with actuarial certification due July 1, 2026.

The Ruling That Forced CMS's Hand

Clover Insurance Company sued the Department of Health and Human Services in November 2025 after CMS's 2026 Star Ratings calculation dropped its flagship PPO contract from 4.0 to 3.5 Stars, a move Clover said cost it roughly $120 million in bonus and related payments (Becker's Payer Issues, June 2026). The U.S. District Court for the Southern District of Georgia ruled against CMS on two separate grounds on May 27, 2026. First, the court held that the plain text of 42 U.S.C. § 1395w-23(o)(4)(A), read against the data-collection authority Congress granted in § 1395w-22(e), limits CMS to quality measures built from the HEDIS, HOS, and CAHPS data categories as they existed in 2003, meaning ten of the measures CMS used in Clover's calculation relied on data sources the agency was never authorized to use. Second, the court found that CMS's inclusion of ten additional measures triggered the notice-and-comment rulemaking requirement under § 1395hh(a)(2), and because CMS skipped that process, those measures were procedurally invalid.

The remedy was immediate and specific to Clover: CMS recalculated the company's PPO contract (H5141) and HMO contract (H8010), covering more than 97% of its Medicare Advantage membership, from 3.5 Stars to 4.5 Stars for the 2026 measurement year. That two-tier jump is the mechanism behind Clover's $120 million figure, and it is also what turned an individual lawsuit into an industry-wide event. Rather than litigate the same twenty measures contract by contract against every plan that might sue on identical grounds, CMS chose to apply the court's data-source reasoning voluntarily and industry-wide, a decision the agency announced in a Health Plan Management System memo to Medicare Advantage organizations on June 17, 2026 (Rebellis Group, June 2026).

What the June 17 Memo Actually Changed

CMS's recalculation was narrower than a full Star Ratings do-over. The agency recalculated 2027 Quality Bonus Payment ratings using only CAHPS, HEDIS, and HOS data, removing every Part D measure from the calculation along with six disputed Part C measures that implicated the same statutory and procedural defects the Clover court identified (Avalere Health Advisory, July 2026). Critically, CMS stated the change applies only to 2027 QBP ratings, not to the underlying 2027 Star Ratings themselves and not to 2028 QBP methodology, leaving the broader measure-set question for the agency's pending appeal or a future rulemaking cycle rather than resolving it (Avalere Health Advisory, July 2026).

CMS also built in a one-directional guardrail: contracts keep the higher of their original or recalculated QBP rating, so a plan whose recalculated score came out lower than its original rating simply retains the original (Healthcare Finance News, June 2026). That hold-harmless design meant every Medicare Advantage organization had an incentive to at least check its recalculated number, since there was no scenario in which requesting the recalculation could reduce a contract's 2027 quality bonus. CMS was careful to frame the move as a one-time accommodation rather than a concession on the merits. "CMS's decision to recalculate 2027 Quality Bonus Payment ratings...has no bearing on CMS's potential exercise of its right to appeal" (CMS, June 2026, via Healthcare Dive). TD Cowen analyst Molly Turco read the same memo as the agency "conceding on the data source argument" while signaling it intends to "fight on that issue" of procedural rulemaking defects on appeal (TD Cowen, via Healthcare Dive, June 2026), a split posture that leaves the ten procedurally invalid measures in legal limbo even as the ten data-source measures are gone for good in 2027.

What a Star Tier Crossing Is Worth in Bid Dollars

The reason CMS's recalculation is a pricing event and not just a compliance memo is that Star Ratings feed directly into two separate levers of Medicare Advantage revenue. Under CMS's standing quality bonus structure, contracts rated 4.0 Stars or higher receive a benchmark bonus of 5 percentage points, or 10 points in qualifying double-bonus counties, layered on top of their county benchmark; contracts below 4.0 Stars receive no benchmark bonus at all. Separately, the rebate percentage, the share of the benchmark-to-bid spread that must flow back to members as supplemental benefits or premium reductions, steps from 50% below 4.0 Stars to 65% at 4.0 Stars and 70% at 4.5 Stars and above (CMS QBP methodology, cited in actuary.info, 2026).

Clover's jump from 3.5 to 4.5 Stars therefore crossed both thresholds at once: it moved from zero benchmark bonus to the full 5-point (or 10-point) bonus, and from the 50% rebate tier to the 70% tier. To illustrate the order of magnitude on a generic contract, not a Clover-specific figure, a plan with a $1,300 county benchmark that crosses from below 4.0 Stars to 4.5 Stars picks up roughly $65 per member per month in additional benchmark room from the 5-point bonus alone, before accounting for the rebate percentage jump on whatever benchmark-to-bid spread the plan is running. Multiplied across a membership base in the tens of thousands and extended over a full contract year, that per-member arithmetic is exactly the kind of math that turns a $120 million allegation from a single plaintiff into an industry-wide recalculation event that CMS could not contain to one contract.

Nine Days From Memo to Certification

The operational compression is the part of this story the litigation coverage has mostly skipped. CMS's June 17 memo gave Medicare Advantage organizations until June 22 to notify the agency whether they intended to resubmit a 2027 bid based on a recalculated rating, reopened the Health Plan Management System bid submission mechanism on June 25, held the resubmission deadline at June 29, and required actuarial certification of any resubmitted bid by July 1 (Rebellis Group, June 2026; Cotiviti, June 2026). That is a nine-day window from notification to certification, and a four-day window from bid reopening to bid closing, to redo work that normally runs on a months-long calendar culminating in the June bid deadline that had already closed once.

2027 QBP Recalculation: Compressed Resubmission Timeline
Date	Milestone
May 27, 2026	S.D. Georgia rules against CMS in Clover Insurance Co. v. HHS
June 17, 2026	CMS issues HPMS memo announcing voluntary 2027 QBP recalculation
June 22, 2026	Deadline for plans to notify CMS of intent to resubmit bids
June 25, 2026	CMS reopens HPMS bid submission mechanism
June 29, 2026	Bid resubmission deadline
July 1, 2026	Actuarial certification of resubmitted bids due

Sources: Rebellis Group (June 2026); Cotiviti (June 2026); Avalere Health Advisory (July 2026).

For a bid actuary, resubmission was not a one-line rating update. A revised QBP rating changes the benchmark, which changes the rebate dollars available, which changes what supplemental benefits, premium credits, or cost-sharing reductions the plan can afford to fund, which in turn requires rerunning the bid pricing tool, revising the actuarial memorandum that documents assumption changes, and producing a new certification statement under a signature deadline that arrived roughly two weeks after the underlying court ruling became public. Plans that chose to resubmit had to make that call by June 22, five days after the memo, with incomplete visibility into whether competitors would resubmit and reshape the local benefit landscape those actuaries were pricing against. Declining to resubmit was itself a defensible actuarial decision for plans whose recalculated rating offered a marginal gain not worth the certification risk of compressed review, but it left money on the table for any plan that skipped the analysis rather than running it.

The certification itself carries the same content requirements it always does: the signing actuary must attest that the bid's projected revenues and benefit costs were developed in accordance with generally accepted actuarial principles and reflect the plan's best estimate of the coming contract year. What changed was the time available to support that attestation. A normal bid cycle gives pricing teams months to reconcile a Star Ratings assumption against updated benchmark projections, run sensitivity testing across a range of rebate scenarios, and document why a given supplemental benefit package is affordable at the certified revenue level. Compressing that same reconciliation into the gap between a June 25 bid-window reopening and a July 1 signature meant many actuaries were certifying benefit designs built on assumption updates that had only been through a single review pass rather than the usual multi-round check, raising the practical question of how a signing actuary documents reliance on a rating CMS itself might still reverse on appeal. Plans that had already built modular bid pricing tools, ones where a Star Ratings or benchmark input could be swapped without rebuilding the underlying cost and utilization assumptions from scratch, were the ones positioned to use the full four-day resubmission window productively rather than spending it on data assembly.

A Third Consecutive Year of Litigation-Driven Recalculation

Clover's case did not happen in isolation, and treating it as an isolated event undersells its planning relevance. Elevance Health sued CMS on July 1, 2026, over $115 million in Medicare Advantage Star Ratings bonuses, arguing CMS applied the Clover-driven measure removals unevenly across Elevance's five affected contracts (actuary.info, July 2026). That lawsuit landed the same day the Clover-driven certification deadline closed, meaning the industry moved directly from resubmitting bids under one court's ruling to litigating whether CMS applied that ruling's remedy consistently. This is now the third consecutive year CMS has had to recalculate Star Ratings in response to litigation, a pattern that has coincided with a broader erosion in Medicare Advantage quality bonus eligibility: only 68% of Medicare Advantage enrollees are in a plan that qualifies for a 2026 quality bonus payment, down from 75% in 2025 (KFF, 2026), against an industry-wide 2026 quality bonus pool of roughly $13.4 billion (KFF, 2026).

The recalculation also lands inside a Medicare Advantage risk pool that is already being reshaped by forced disenrollment, as plan exits and network narrowing pushed roughly 3 million members into new contracts heading into the 2027 plan year (actuary.info, 2026). Star Ratings litigation compounds that instability rather than sitting apart from it: a plan gaining bonus eligibility through recalculated measures can suddenly afford richer supplemental benefits than a competitor that did not resubmit, reshaping the local competitive landscape that displaced members are choosing among during 2027 open enrollment, on top of whatever benchmark and risk-model changes CMS finalized in its broader 2027 rate announcement (actuary.info, 2026).

Which Plans Had the Most to Gain

Not every Medicare Advantage organization benefited equally from the recalculation, and the pattern is instructive for how bid actuaries should think about Star Ratings sensitivity going forward. TD Cowen modeled what would happen if Clover's recalculation criteria applied across the largest national carriers: UnitedHealthcare's average Star Rating would improve from 4.11 to 4.27, worth an estimated $500 million in additional quality bonus payments, while Elevance's average would move from just 3.90 to 3.92, worth an estimated $25 million (TD Cowen, via Healthcare Dive, June 2026). The two point-movements are similar in absolute magnitude, 0.16 versus 0.02, yet the dollar outcomes differ by a factor of twenty. That gap is a cut-point story, not a data-quality story: UnitedHealthcare evidently had a larger number of contracts clustered near a bonus-eligible threshold, meaning even a modest score improvement pushed multiple contracts across the 4.0-Star or 4.5-Star line into a materially higher rebate and benchmark tier, while Elevance's contracts sat in ranges where the same measure removals nudged scores upward without crossing an additional threshold.

For plan actuaries building 2027 competitive positioning, the practical lesson is that a contract's proximity to a Star Ratings cut point matters more than its absolute score when assessing exposure to future recalculation events. A contract sitting at 3.98 Stars carries far more recalculation upside, and far more litigation-driven volatility exposure generally, than a contract sitting comfortably at 4.3 Stars, even though the two contracts might look similar on a raw quality scorecard. Heading into 2027 open enrollment, plans that captured a tier crossing through this recalculation now hold a temporary benefit-richness advantage over local competitors that did not, an advantage actuaries pricing 2028 bids will need to treat as a one-time artifact of litigation timing rather than a durable competitive signal.

Why This Matters for MA Bid Actuaries

CMS methodology risk has become a line item bid actuaries have to underwrite alongside medical trend, and this recalculation is the clearest evidence yet. Three consecutive years of litigation-forced Star Ratings changes, a July 2026 Elevance lawsuit alleging uneven application of this very recalculation, and a compressed nine-day resubmission-to-certification cycle together mean the assumption that a finalized Star Rating is a fixed input to bid pricing no longer holds. Plans that build explicit sensitivity ranges around Star Ratings cut-point exposure, document the actuarial basis for resubmission decisions made under compressed timelines, and monitor pending litigation as a live pricing variable will be better positioned for the next recalculation than plans that treat each court ruling as a one-off surprise.