Medicare Advantage Star Ratings will be released soon. Each year, the Centers for Medicare & Medicaid Services (CMS) evaluates plans based on a 5-star rating system to help consumers compare the quality of plans offered to make informed healthcare decisions.
The Star rating system rewards higher-performing plans. Here’s how optimizing Star ratings can impact a plan’s enrollment, retention, and reimbursement.
What is the Medicare Star Rating System?
Star Ratings are a quality performance metric used to measure how well Medicare Advantage and Part D plans perform. This system gives consumers an indication of healthcare payer quality by scoring how well plans perform in categories, including quality of care and customer service. Star Ratings range from one to five stars, with five being the highest.
Plans receive a rating for each category and an overall Star rating to summarize their comprehensive performance. Consumers can use Star ratings to compare the differences and performance between different plans so they are empowered to make informed health decisions.
Medicare Advantage Plans are rated on how well they perform in five different categories:
- Staying healthy: screenings, tests, and vaccines
- Managing chronic conditions
- Plan responsiveness and care
- Member complaints, problems getting services, and choosing to leave the plan
- Health plan customer service
The Impact of Star ratings on:
Enrollment
High Star rating performance helps consumers determine how to choose between plans. Achieving a higher Star rating indicates better quality, lower plan costs, or both, which can help health plans attract new participants to drive recruitment and revenue.
Health plans with higher ratings tend to attract more members. As of 2023, 51% (30.8 million people out of 60.0 million) of eligible Medicare beneficiaries are enrolled in a Medicare Advantage plan [1]. Enrollment is projected to continue to grow throughout the next decade.
Improving ratings by one star could, on average, lead to a year-over-year 8 percent to 12 percent increase in plan enrollment [2]. Additionally, improving to a 4-star rating from a 3-star rating could increase revenue between 13.4% and 17.6% through increased enrollment revenue and additional bonus payments.
Retention
Retaining members is important all year round, but especially in the fourth quarter when Medicare Advantage, Medicaid and Affordable Care Act (ACA) members will be able to change coverage. Staying or switching plans may depend on their overall experience with their plans. Even losing a small percentage of members can have major financial implications for health plans. Improving the member experience and Star ratings can boost retention rates to help safeguard next year’s budgets.
Star ratings also directly impact a plan’s retention since members can switch to a five-star plan anytime between December 8 and November 30. Members enrolled in a low-performing plan (one with a rating of fewer than three stars for three consecutive years) can switch to a higher-rated plan between January 1 and December 31.
Reimbursement
Higher Star ratings also impact the bonus payments and rebates a plan can receive. There are millions of dollars at stake, with bonuses reaching a record-high of $12.8 billion in 2023 [3].
The applicable bonus and rebate percentage based on Medicare Advantage plan Star ratings is as follows:
- 3-Star plans receive a 0% bonus and 50% rebate
- 3.5-Star plans receive a 0% bonus and 60% rebate
- 4-Star plans receive a 5% bonus and 65% rebate
- 4.5-Star plans receive a 5% bonus and 70% rebate
- 5-Star plans receive a 5% bonus and 70% rebate
Rebates and bonus payments enable Medicare Advantage plans to offer additional benefits to enrolled, such as reduced premiums and innovations in care, such as home-based care, care management, wellness programs, and telehealth.
Boost Star ratings with LetsGetChecked
Increasing care access and member engagement can boost Star Ratings, increasing enrollment and revenues, bonus payments, and rebates. LetsGetChecked’s member-centric healthcare solutions help improve the member experience and close gaps in care so plans can attract, retain, and empower members to engage in preventive care and manage conditions.
