Payers need to properly adapt to changes made to the Medicare Advantage star ratings program or risk financial repercussions, industry experts told Fierce Healthcare.
Among their recommendations: embrace technology, prioritize health equity and improve the member experience.
The Centers for Medicare and Medicaid Services' annual star ratings judge Medicare Advantage and Part D plans on a one-to-five-star scale (five being the best) to determine whether a health plan is providing optimal quality of care. While they're based on dozens of quality measures, the ratings are designed to reward successful plans and punish inferior plans, allowing customers to shop for the best deal they can.
“It’s a program that evolves and changes based on the dynamic of the environment we’re in,” explained Darren Ghanayem, managing director for technology consulting firm AArete.
Unfortunately for insurers, the 2024 star ratings reveal in October did not go well. Just 31 plans earned a five-star rating, and the average rating decreased from 4.14 to 4.04, according to analysis from healthcare advisory firm Chartis.
At fault for the decrease is the removal of COVID-19-induced adjustments designed to help plans during the pandemic and the Tukey outlier deletion method, said Cynthia Henry, director of population health informatics at ZeOmega, a healthcare enterprise management company, in October.
“When CMS establishes the thresholds for five-star plans, they use a clustering methodology where they look at the performance overall and then they look where performance across the measures is clustered,” she said. “Then they use those natural gaps to create what they call cut points. What Tukey does is it removes some of those outliers [because] it has a tendency to skew … and moves those thresholds a little bit higher.
“As Tukey [outlier] removal is implemented over the next couple of years, we're going to see fluctuation, and then it should start to stabilize out at about the three-year mark,” Henry added.
The star rating results may sound marginal, but they have huge financial impact. And with the Medicare Trust Fund projected to be insolvent by the early 2030s without significant changes, it’s in CMS’ financial interest to “recalibrate” the stars program, said Henry.
Plans that score well are rewarded from the federal government with reimbursement and bonuses, allowing plans to further improve. Plans that struggle get smaller CMS payments and are restricted from marketing during the special enrollment period, instead only able to increase the number of members through the open enrollment period, said Maggie Brown, a regulatory compliance manager for software company HealthEdge.
One prominent example is the Aetna National PPO plan by CVS Health, which dropped from 4.5 to 3.5 stars in 2023, resulting in $800 million less operating income.
How the methodology is changing
Some quality measures, like medication adherence, are triple-weighted by CMS to ensure plans focus on caring for the sickest patients, often suffering from comorbidities. These patients are responsible for the bulk of healthcare costs in the U.S., so CMS values medication adherence that prevents conditions from progressing and keeps people out of the hospital, said ActualMeds CEO and co-founder Patricia Meisner.
Now the star ratings methodology is changing once again. CMS is removing the traditional reward factor that used to boost plans 0.1 to 0.4 stars higher, Meisner explained, in favor of adopting a health equity index for the 2028 star ratings, relying on data from 2024 and 2025 measurement years.
The health equity index is meant to help many groups, she said, including underserved races and cultures, the LGBTQ+ community and people living in remote areas without easy access to quality health care. Plans will perform better if they show they help a significant number of members within low-income, dual-eligible and disabled populations.
The changes lead CMS to believe they will save at least $2.3 billion once the star rating program is fully revamped. Previous analysis of removing the Tukey outlier method could save CMS $935 million alone in 2025, up to $1.5 billion by 2030, according to a white paper (PDF) from actuarial and consulting firm Milliman. But since MA enrollment dramatically increased during the pandemic, those projections could be low.
So, how should plans vulnerable adapt to the changing landscape?
First, payers should begin running measurements and models against the 2027 reporting criteria to see how they stack up, if they aren’t already, said Brown. Plans should use data available to them to better determine performance.
“For instance, one of the measurements that is easy to look at is the measurement of adult BMI (body mass index),” she said. “How does that from your clinical data impact, or not, the measurements in your claims data? [For] breast cancer screenings, you can see based on your population, when you break them down based on race and ethnicity, dual-eligibility, geographic area, how does that relate to your claims experience? Are you meeting your goals in the number of your members that get that screening on an annual basis and does that play out in better outcomes?”
“Payers now have to refocus on the social determinants of health (SDOH) as well as the clinical profile of these patients,” said Meisner. “They need to capture data around that. They need to make sure they have multilingual care coordinators … and they need to look at patient engagement rates for this population versus the average MA member.”
Brian Bainter, ActualMeds vice president of strategic accounts, said health plans need to do better reaching these populations, which often have a higher percentage of members that need to worry about pressing daily issues like worrying about public transit, affording groceries, or paying for doctor’s appointments for chronic conditions. Solutions, he said, need to go beyond text messaging or automated prescription refill calls.
Doubling down on technology, member experience
Plans also need to double down on improving the patient experience in 2024, as the Consumer Assessment of Healthcare Providers and Systems is still heavily weighted in the star ratings program.
“Every interaction a plan has with its member should be looked at as a gift, not a burden,” said Ghanayem, noting that plans sometimes try to get members off the phone or avoid contact to reduce administrative costs. “When you get an MA member on the phone … it needs to be thought as an experience that should be positive.
Other experts argue that the poor technology payers have at their disposal for members does them no favors.
“I think there’s a deficit,” said Ghaneyem. “Everyone has a website, a portal, everyone has a mobile app. But the adoption rate remains very, very low. Look at the paperless adoption. We’re printing paper in this industry so much.
“I think the experience investments are lacking,” he added. “I think as a firm we are finding that [plans] that have all of the boxes checked, where they’ve got these components but they’re not really weaving it together as a positive experience.”
“The whole healthcare paradigm is going digital,” said Brown. “We have got to start making decisions assuming people are tech savvy.”
Some recent partnerships show payers are beginning to do just that. In October, Alignment Health launched a partnership with grocery delivery company Instacart for MA plans in 13 California and Nevada counties, which gives seniors a $2,000 annual allowance for dual eligible members can spend on food, gas, utilities and home safety items. Members will get education on how to set up an account, the companies announced. These partnerships are the ones that must be more commonplace and expanded upon, said Brown.
“The Instacart partnership is great, but you have to educate members on how to use Instacart,” she said. “A lot of members forego some of the things we can do because the understanding of how to use those benefits is there’s a gap there. That’s the people side of the star ratings. The technology side is there. We need to get better at helping people connect to that technology.”
Ghanayem added said it’s the role of payers to help educate providers to understand the quality programs and embrace metrics, so doctors include all relevant diagnoses and procedures in a claim. Some payviders, a vertically integrated payer and provider model, have a built-in advantage for this reason, he said.
Payers are urged to revisit its relationships with artificial intelligence. Plans should be able to target segments of the population to track SDOH differences between members, in part by using tools developed by CMS, and use technology to predict why members may disenroll in a plan. They should also consider using AI for process automation and more pointed member engagement, said Meisner.
Editor's Note: The article was updated to correct a description of the Tukey outlier deletion method.