Stock reaction and immediate cause
Clover Health Investments Corp (NASDAQ:CLOV) shares climbed 10.7% in premarket trading on Wednesday after regulators informed the company that its 2026 Medicare star rating had been recalculated at 4.5 stars, up from a previously reported 3.5 stars. The change follows a court decision that required the Centers for Medicare & Medicaid Services (CMS) to revisit the rating for the insurer’s main plan.
Regulatory notice and court timeline
According to a regulatory filing, CMS notified Clover on June 9, 2026 that the agency had recalculated the company’s 2026 Star Rating as 4.5 Stars, reflecting the outcome of litigation. The action flows from a judgment by the United States District Court for the Southern District of Georgia, which granted summary judgment in part for Clover Insurance Company in its suit against the U.S. Department of Health and Human Services.
The court entered final judgment on May 29, 2026. That judgment set aside the earlier 2026 3.5 Star Rating for Contract H5141 and directed CMS to recalculate the rating in a manner consistent with the court’s order.
Scope of the rating adjustment
The improved 4.5 Star rating applies specifically to Contract H5141, Clover’s preferred provider organization (PPO) plan. That contract covers more than 97% of Clover’s members, making the adjustment relevant to the vast majority of the company’s Medicare Advantage enrollment. CMS has instructed Clover to submit alternate bids at the 4.5 Star level; the recalculated rating will apply for Payment Year 2027.
Clover’s health maintenance organization (HMO) plan, Contract H8010, was not part of the litigation and retains a 2026 Star Rating of 4.0 Stars.
What star ratings mean
Medicare star ratings are used by CMS to evaluate the relative quality of health and drug services received by Medicare Advantage plan members. Higher star ratings can translate into bonus payments from CMS and can be a factor in attracting additional members during enrollment periods.
Context and near-term implications
The court-ordered recalculation and subsequent CMS guidance to resubmit bids at the higher rating set in motion the market reaction seen in premarket trading. The upgrade affects the primary PPO contract that encompasses the bulk of Clover’s membership and will be reflected in activities tied to Payment Year 2027.