Policy & oversight
A New Analysis Says Medicare's Quality Bonus Program May Have a Structural Problem
Researchers writing in Health Affairs argue that 2026 court rulings have not merely caught a procedural error, but have exposed a deeper flaw in how Medicare rewards Advantage plans for quality.
By the Goodsurance editorial teamJuly 19, 2026
A commentary published July 17 in Health Affairs Forefront contends that the wave of 2026 litigation over Medicare Advantage star ratings points to structural weaknesses in the quality bonus program itself, not just in how CMS applied certain measures.
The legal trouble began after a federal judge ruled in May 2026 that CMS had used 20 measures in setting 2026 star ratings that were either based on data sources not authorized by the Medicare Act or adopted without proper notice-and-comment rulemaking. CMS recalculated Clover Health's rating from 3.5 to 4.5 stars following that ruling, but retained 10 of the contested measures for all other plans. That partial remedy prompted lawsuits from Elevance Health, SCAN Health Plan, and Alignment Healthcare.
Courts found Medicare's quality rating rules were broken. Now researchers say the whole bonus program may need a rethink.
The Health Affairs researchers note that about one-third of all Medicare Advantage contracts, 175 in 2026, fell below the four-star threshold needed to earn quality bonus payments. KFF found the federal government is expected to pay more than 13.4 billion dollars in quality bonuses to Medicare Advantage plans in 2026, yet the share of enrollees in bonus-eligible plans fell to 68 percent, the lowest since 2018. The researchers conclude the program is likely falling short of its objective of rewarding plans that genuinely improve care.
For beneficiaries, quality bonuses matter because plans use that money to reduce premiums or add supplemental benefits. When the bonus methodology is in legal dispute, it creates uncertainty about what each plan can offer.
In plain words
Medicare pays extra money to health plans that score well on a government rating system. A July 17 study says the system has serious problems. Courts found that many scoring rules were not written correctly. About one in three Medicare Advantage plans scored too low to get extra money in 2026. Researchers say the whole program may not be helping patients get better care. Plans use that extra money to lower costs or add benefits, so the dispute affects what members receive.
Understand the basics first
Source: Health Affairs Forefront
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