CMS: Medicare Advantage plans with 4 or more stars skyrocket in 2022 compared to 2021

A computer on a pink background with five gold stars in front of it.
Medicare Advantage plans get bonus payments for reaching four or more stars, one of the key drivers in higher Medicare spending compared to traditional Medicare. (Lydia Zuraw/KHN illustration; Getty Images)

Nearly 70% of Medicare Advantage (MA) plans that offer prescription drug coverage will have a star rating of four or more stars in 2022, a massive increase from 49% of plans in 2021, new federal data show.

The data on MA and Part D star ratings, released Friday by the Centers for Medicare & Medicaid Services, come ahead of Medicare open enrollment that kicks off Oct. 15.

“The Medicare Advantage and Part D Star Ratings are important tools in the toolbox for beneficiaries to use as they consider Medicare coverage options,” CMS Administrator Chiquita Brooks-LaSure said in a statement. “CMS’ annual ratings deliver meaningful information about the quality of each plan to help people with Medicare make informed healthcare decisions.”

MA plans get a star rating from one to five each year based on their performance on several measures that include patient satisfaction and screenings. Star ratings typically are calculated based on the prior year, so the 2022 ratings are based on data from this year.

“While adjustments were made for the 2022 star ratings due to the possible impact of the COVID-19 pandemic, this also reflects improvements in sponsors’ scores on several measures,” CMS said.

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The increase in plans with higher star ratings is likely to drive more Medicare spending into the MA program.

MA plans get bonuses for reaching quality ratings of four or more stars.

An analysis from the Kaiser Family Foundation discovered that the annual bonuses to MA plans quadrupled from 2015 to 2021, with plans getting $11.6 billion in bonuses this year compared to $3 billion in 2015. Unrated MA plans are also eligible to receive a bonus.

“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 in these plans,” Kaiser’s analysis said.

CMS reported Friday that approximately 90% of people are currently in an MA plan that will have four or more stars in 2022.

Spending on MA plans has outpaced traditional Medicare. A separate Kaiser analysis found that MA payments increased federal spending by $7 billion in 2019, driven primarily by higher rebates and benchmarks used to determine payments to an MA plan. Those benchmarks can be increased if a plan’s star ratings also increase.