Alignment Healthcare has filed a lawsuit against the Centers for Medicare & Medicaid Services (CMS), challenging the agency’s methodology for the 2027 Medicare Advantage star ratings. The complaint, lodged Oct. 12, 2026, in U.S. District Court for the District of Columbia, accuses CMS of deciding important rating measures through a series of “technical notes” rather than following the formal notice-and-comment rulemaking process required by statute.
The lawsuit asserts that CMS has “completely departed from Congress’s vision” for the Star Ratings program by failing to use “consistent, stable specifications” for the measures that underlie ratings. According to Alignment, Congress intended those measures to be predictable and developed with input from providers, plans, and the public.
Alignment’s central legal claim is that CMS’s approach violated the Administrative Procedure Act. Instead of publishing binding specifications under the traditional regulatory process, the insurer says CMS detailed key metrics in technical notes. In Alignment’s view, this denies the public and stakeholders a proper opportunity to comment and prevents measures from being subject to the procedural protections Congress required.
The company argues that consistent application of statutory requirements is essential because the Star Ratings directly affect plan payments and competition, and because beneficiaries rely on those ratings when choosing plans. Alignment says the ratings should be based on clinically validated measures that were subjected to notice and comment, consistent with congressional direction.
Alignment’s complaint points to a series of court rulings that recently challenged CMS’s star-ratings methodology. Over the summer, a case brought by Clover Health resulted in a ruling that tossed 20 metrics used in the 2026 calculations. A Georgia federal judge determined that 10 of those measures exceeded CMS’s statutory authority and that another 10 had been promulgated improperly.
Following that decision, CMS recalculated star scores, but Alignment says the agency only set aside the 10 measures the courts found outside its regulatory authority and otherwise maintained its approach. The Trump administration has appealed the Clover ruling; that appeal is ongoing, the complaint notes.
Alignment says it suffered both reputational and financial harm from the 2027 ratings. The company reports a sharp decline in the share of members enrolled in plans rated at four stars or higher: just 25% in 2027 compared with 100% in 2026.
The release of the 2027 ratings coincided with a drop in Alignment’s stock price, the complaint states. The filing notes that share prices subsequently rebounded, but it identifies the ratings decline as a cause of the initial market reaction.
The Star Ratings program serves two main functions: it influences quality bonus payments to Medicare Advantage plans and it is intended to help beneficiaries and brokers identify higher-quality benefits. Alignment’s lawsuit stresses that predictable, comparable ratings are critical both for plan finances and for beneficiary decision-making.
If courts conclude that CMS must use notice-and-comment rulemaking to set key specifications, the effect could reach beyond Alignment. A ruling in favor of the insurer might require CMS to rework how it adopts measures and to republish specs through a formal rulemaking process, potentially affecting future star calculations and payments.
In its filing, Alignment asks the court for relief and seeks a decision by May 2027. The complaint frames the requested timetable as necessary given the role of the Star Ratings in plan payments and enrollment decisions.
The lawsuit was filed on Oct. 12, 2026. Alignment did not provide a comment to reporters before publication, according to the report.
The dispute sits within a broader pattern of litigation over CMS’s regulatory methods for the Star Ratings program. Courts have recently scrutinized the agency’s authority and the administrative processes it used to adopt measures. With the Clover decision under appeal and multiple cases challenging CMS’s practices, the legal environment around star ratings remains unsettled.
For beneficiaries, brokers and plans, the outcome could affect how ratings are calculated and how reliable those ratings are perceived to be. For plans like Alignment, the ratings have direct financial implications through quality bonus payments and indirect effects on market reputation and membership distribution.
Pending litigation and the Clover appeal will determine whether CMS must change its approach to setting measure specifications. Alignment has asked the court for a decision by May 2027, but the complaint does not specify the exact remedies it seeks beyond challenging the methodology and asserting statutory violations.
As the court process unfolds, stakeholders will be watching whether CMS continues to rely on technical notes for specifications or moves to re-establish measures through formal rulemaking. Any judicial order altering the agency’s practice could influence how the Star Ratings are produced in future years and how plans are evaluated and paid.
(Details beyond those included in Alignment’s lawsuit or reported in the referenced court decisions were not provided in the source article.)
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