Shares of Clover Health surged 10.5% in after-hours trading to $5.06 after the Centers for Medicare & Medicaid Services published its 2027 Medicare Advantage star ratings, revealing that one of Clover's contracts earned the top five-star designation — a rare achievement in the industry. Clover Health Hits the Medicare Jackpot With a Five-Star Rating, but Is This Enough to Sustain a $2.5 Billion Valuation?
Shares of Clover Health jumped 10.5% to $5.06 in after-hours trading after the Centers for Medicare & Medicaid Services awarded the company's PPO Medicare Advantage plans a perfect five-star rating for 2027 — a dramatic leap from the 3.5 stars the same contract held just a year ago.
• From Courtroom to Top of the Class — A Rare Trajectory. CMS awarded Clover's PPO plans a 5-star rating and its HMO plan 4.5 stars for 2027, affecting payment year 2028. This caps a remarkable arc: Clover successfully challenged its 2026 star rating in court, where a federal judge found CMS improperly relied on 20 quality measures , leading to an interim bump to 4.5 stars. Now Clover has earned the top mark outright. Only 15 MA-PD contracts nationally earned five stars out of 508 rated — roughly 3% of all contracts.
• The Money Behind the Stars Is Real. Medicare's bonus system gives plans rated four stars or higher an increase in their benchmark of 5 percentage points in most counties and 10 percentage points in double bonus counties. Five-star plans also keep 70 percent of the rebate — the maximum share — when they bid below CMS benchmarks. For context, Clover estimated that its prior 3.5-star rating cost the company approximately $120 million in 2027 bonus payments. Moving to five stars for payment year 2028 should unlock significantly more than that figure.
• Year-Round Enrollment Opens a Growth Spigot. At 5 stars, Clover's PPO plans will be able to enroll beneficiaries year-round , not just during the annual open-enrollment window. That matters enormously because through the first half of 2026, Medicare Advantage membership grew roughly 48% year-over-year to more than 157,000 members, with about 98% in PPO plans. Continuous enrollment could turbocharge that trajectory even further heading into 2028.
• A Legal Asterisk Investors Should Watch. CMS calculated the PPO rating excluding 20 measures covered by a May 27, 2026 court decision that is on appeal; including those measures would have produced 4.5 stars. If the government prevails on appeal, future ratings could revert to a lower methodology. The company's Q3 earnings on November 4 will be the next chance for management to quantify the dollar impact and address this risk.
The bottom line: A five-star rating is the single most valuable designation a Medicare Advantage plan can receive, combining higher government payments, richer benefits to attract members, and year-round enrollment. For a company with a roughly $2.6 billion market cap that was fighting for 3.5 stars just 12 months ago, the upgrade is transformational — if it holds.