Elevance’s Legal Battle Over Medicare Advantage Star Ratings: A Deep Dive

Elevance's Challenge of Medicare Advantage Star Ratings

Elevance, along with its regional subsidiaries, has filed a lawsuit against the federal government in response to modifications made to the star ratings for Medicare Advantage plans. These alterations, which utilized a novel approach known as 'Tukey' to stabilize star ratings, have led to a considerable drop in ratings for Elevance. The fallout from this is projected to be a staggering $500 million decrease in quality bonus payments. Elevance's lawsuit alleges that the government's adjustments are 'arbitrary and capricious', in violation of the Administrative Procedure Act.

The Controversy Surrounding Star Ratings

Star ratings have long been a contentious issue, with a constant tug of war between insurers and the government over the size of bonuses. This conflict has been further ignited by the recent regulatory changes to Medicare Advantage. Elevance, which operates health plans in 22 states and Puerto Rico, serving 2.9 million Medicare beneficiaries in Medicare Advantage and prescription drug plans, is feeling the brunt of these changes.

The Impact of the Star Rating Change

Elevance argues that these changes have unfairly caused its bonus revenue to plummet by $500 million. Additionally, the company accuses the government of stripping it of $190 million in bonuses due to a dropped call to its call center - a situation it claims was beyond its control. Interestingly, some research suggests that star ratings do not effectively measure plan quality, thereby adding more financial strain on Medicare. The fallout from these star rating changes echoes similar complaints from other insurers.

Recent Developments at Elevance

In other news, Elevance Health has announced its acquisition of Paragon Healthcare Inc, a company that specializes in providing infusion services for patients with chronic and acute conditions. This strategic acquisition is aimed at enhancing Elevance Health's capabilities to offer convenient access to specialty medications and services for patients living with chronic and complex illnesses. Following the completion of the acquisition, Paragon Healthcare will function as part of CarelonRx, the pharmacy services segment within Elevance Health's health services division.

As the legal battle unfolds, the healthcare industry and Elevance's 2.9 million Medicare beneficiaries will be closely watching the outcome. The lawsuit's resolution will not only impact Elevance but also set a precedent for other insurers who are grappling with similar challenges.