News Briefs: SCAN Wins Lawsuit Over 2024 Star Ratings Calculations
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Jun 06, 2024
SCAN Health Plan won a legal challenge to CMS’s calculation of the 2024 Star Ratings that could have major implications for quality bonus payment (QBP) outlays and 2025 cut point generation. According to a June 3 memorandum opinion filed in the U.S. District Court for the District of Columbia, Judge Carl Nichols agreed with the not-for-profit Medicare Advantage insurer that CMS “failed to follow its own regulation,” which resulted in SCAN receiving an incorrect Star Rating. In a lawsuit filed against HHS in December, SCAN argued that CMS was “arbitrary and capricious” when it applied new guardrails (i.e., restricting the movement of cut points by no more than 5% in either direction) to hypothetical cut points for the previous year rather than actual cut points, yet did not amend its regulations to reflect that decision. Judge Nichols agreed that the “best and most natural reading” of CMS’s so-called Guardrail Rule was that it referred to actual cut points in both the initial year and the following year, and he granted the plaintiff’s motion for summary judgment. SCAN, which serves roughly 277,000 MA enrollees in five states, had a 4.5 Star Rating for six consecutive years until 2024, when it received a 3.5 Star Rating, costing it nearly $250 million in lost quality bonus payments. Elevance Health, Inc. in December filed a similar lawsuit; the insurer in March disclosed that CMS “updated” its original ratings, which will lead to an additional $190 million in revenue for plan year 2025. MA insurers Hometown Health Plan and Zing Health also have similar suits pending, reported Modern Healthcare. Read more© 2024 MMIT
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