Background
HMO Louisiana, Inc. participated in the Medicare Advantage program and consolidated two contracts in 2024. The Centers for Medicare and Medicaid Services initially calculated the new contract’s 2025 star rating without including data from the consumed contract. After the insurer requested the change, the agency recalculated the rating by including the consumed contract’s data, which resulted in the same overall rating. The insurer then sued, arguing the inclusion violated regulations and that the agency failed to explain its change in position.
The court’s reasoning
The court found that federal regulations distinguish between consolidation and termination, meaning a consumed contract is not terminated and its data must be averaged with the surviving contract’s data. The court also determined that the agency’s recalculation was not a change in policy because it had never previously considered this specific scenario, and the insurer had no reliance interest in the initial preliminary calculation.
We reject HMOLA’s argument that a consumed contract should be treated as a terminated contract for purposes of calculating the consolidated contract’s star rating.
Opinion for the Court filed by Circuit Judge Pan
What it means going forward
The decision confirms that CMS must include data from consumed contracts when calculating star ratings for consolidated Medicare Advantage plans, ensuring beneficiaries receive a comprehensive quality assessment.