CVS Health stock faces $2 billion Medicare ratings risk

CVS Health filed a federal lawsuit on Monday, October 26, challenging the methodology behind the 2027 Medicare Advantage star ratings. The complaint argues that the Centers for Medicare and Medicaid Services used 28 measures that were adopted unlawfully or without the notice-and-comment process required under the Administrative Procedure Act, according to Healthcare Dive.

CVS Health stock traded at 81.19 euros on Lang & Schwarz at 10:45 CEST on Friday, October 30, 0.19 percent above the Xetra close of Thursday, October 29, at 81.04 euros. Investors can follow the real-time quote of CVS Health stock.

Why CVS went to court

The lawsuit seeks to vacate the ratings for dozens of CVS contracts and require CMS to recalculate them without the disputed measures. CVS says the challenged methodology reduced the ratings of its Medicare Advantage plans and could cost the company more than 2 billion US dollars in 2028 quality bonus payments and rebate retention.

The financial impact is tied to the timing of the program. CMS released the 2027 ratings for the Medicare open-enrollment period, while payments in 2028 will reflect those ratings. The percentage of CVS members enrolled in plans rated four stars or higher fell to 67 percent for 2027, from 84 percent for 2026, Healthcare Dive reported.

Rating dispute adds execution risk

CVS says that excluding the contested measures would have lifted the rating of 43 contracts by at least half a star. The company operates a large Medicare Advantage business under the Aetna name, with 4.2 million beneficiaries cited in the report. The legal challenge follows a May ruling in the same Georgia federal court that favored Clover Health in a dispute over measures used for Medicare ratings.

The case is part of a broader insurer response to lower 2027 ratings. Alignment Healthcare, Healthfirst, SCAN Health Plan and Centene have also sued the federal government over their scores, according to Healthcare Dive. The court has not yet ruled on the merits of CVS Health's allegations.

The rating pressure comes as Aetna works to restore margins in Medicare Advantage. The company reduced benefits and exited unprofitable markets for 2026, measures that supported a stronger second quarter. Aetna president Steve Nelson said in September that returning the business to appropriate margins remained a clear priority.

The potential loss is material but must be viewed against CVS Health's scale. Healthcare Dive reported that the company generated almost 135 billion US dollars in annual premiums in 2025, while the Aetna health benefits division recorded 1.8 billion US dollars in operating income that year.

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Further court filings and any CMS response will determine whether the ratings are recalculated before the 2028 payment cycle. Read more news and analyses on CVS Health stock.