Case Explained: HMO LOUISIANA, INC v. DEPARTMENT OF HEALTH AND HUMAN SERVICES

Court: United States Court of Appeals for the District of Columbia Circuit Filed: 2026-06-26 The D.C. Circuit affirmed the district court’s entry of summary judgment in favor of the Centers for Medicare and Medicaid Services (CMS), rejecting HMO Louisiana, Inc.’s claim that CMS’s recalculation of a consolidated Medicare Advantage contract’s star rating was arbitrary and capricious under the Administrative Procedure Act. The court held that CMS properly applied the plain language of 42 C.F.R. § 422.162(b)(3)(i), which mandates that for the first two years following consolidation, a contract’s star rating be calculated as the enrollment-weighted mean of the measure scores of both the surviving and consumed contracts. The court reasoned that a “consumed” contract resulting from consolidation is distinct from a “terminated” contract under the regulations; therefore, CMS was required to include the consumed contract’s data rather than excluding it as “No data available.” Additionally, the court found that the methodology provided beneficiaries with an accurate reflection of plan quality and did not constitute a change in policy requiring a reasoned explanation, noting that the recalculation occurred during a preliminary review process initiated at HMOLA’s own request. Consequently, the agency’s action was upheld, leaving the 2025 star rating for the consolidated contract unchanged at 3.5 stars. Do It For The Case Law is a news reporting service. Nothing in this episode constitutes legal advice.