Medicare Advantage Star Ratings... What Are They? Why Should We Care? What Can We Do About Them?

By Nicholas Libertin III, MD

What are Medicare Advantage Star Ratings?

The Centers for Medicare & Medicaid Services (CMS) created a Star Rating system to help beneficiaries and their families compare plan performance and quality for Medicare Advantage plans. The plans are rated on a one-to-five scale, with one star representing “poor performance” and five stars representing “excellent performance”. Medicare Advantage Star Ratings are released annually and reflect the experiences and outcomes of patients enrolled in Medicare Advantage plans. They utilize 40 different performance measures, including process indicators (e.g. screenings), outcome indicators (e.g. blood sugar level for diabetes), patient satisfaction (e.g. rating of health plan) and timeliness of appeal decisions. 

Why should we (health systems and providers) care? 

Insurance providers have a great deal “on the line” with their Medicare Advantage Star Rating. As a result of changes made in the Affordable Care Act (ACA), plans that receive at least 4 stars and those without ratings (due to low enrollment) receive additional quality bonus payments from Medicare. From 2015 to 2021, the total annual bonuses to Medicare Advantage plans have nearly quadrupled, rising from $3.0 billion to $11.6 billion (Figure 1). The rise in bonus payments is due to both an increase in the number of plans receiving bonuses, and an increase in the number of enrollees. For example, United Health Care’s bonus from their star rating was 3.4 billion dollars in 2021 (Figure 2). Not only does an increase rating generate revenue, it also generates more enrollees for the plan. In 2021, 81% of Medicare Advantage enrollees were enrolled in a plan with 4/5 stars or above (Figure 3). Furthermore, a study done by (a website ranking health plans) showed that the average attrition rate for two-star plans was 22% and only 2% for five-star plans. Lastly, the increase in revenue generated from the bonus payment enables a plan to provide more services to their beneficiaries and thus increase chances of retaining their star rating and enrollees. A simple jump from 3 to 4-star improvement can generate 134% more value to its members in extra benefits and rebates. 

What can we do about them? 

Some variables that dictate the Medicare Advantage Star rating are predetermined (diabetes control, screenings etc.), however there are other performance measure that providers can give necessary feedback, both positive and negative, to the plan and CMS. Customer experience related metrics are projected to determine 57% of overall Star ratings by 2023 (an increase of approximately 25%). In the future, excellent customer experiences will be crucial for Medicare Advantage plans longevity and success. Of the 40 different CMS measures, the most relevant to provider feedback are: customer service, rating of healthcare quality, rating of health plan, complaints about the health plan and reviewing appeals decisions. Many of these are obtained from the Consumer Assessment of Healthcare Providers & Systems (CAHPS) that patient’s complete and have a simple scoring system from “0-10” (0 being the worst, 10 the best). Providers and health systems can also file separate positive comments and grievances with the plan and CMS. Quantity is as important as quality in this instance, as CMS cites that the frequency of both types of comments in these categories directly effects a Medicare Advantage plan’s Star rating. 

Providers can also, with the patient’s permission, file a grievance to CMS with form 1696. This form allows the provider or health system to file a claim, appeal or grievance with CMS on a patient’s behalf. Whichever avenue is chosen, it is important to educate patients on the significance of their feedback. Another potential avenue would be at the contracting level, Medicare Advantage plans are incentivized to seek collaborative arrangements with providers to share the financial benefits of quality and efficiency improvements. Providers should strive to work together with Medicare Advantage plans to ensure we are helping achieve their mission of providing patient centered services that can get them the highest recognition by CMS. As the number of Medicare Advantage plans and their enrollees continue to increase, it is vital that health systems and providers provide necessary feedback and ensure insurance companies actions are accurately depicted in their Medicare Advantage Star Rating.