Medicare Advantage plans are continuing to see a decline in star ratings into 2025. Over the past few years, there has been a steady drop in performance, based on the quality measures put in place by CMS. In 2025, only seven plans achieved a five-star rating, a significant decrease from 74 in 2022.
What Medicare Measures
CMS has established nearly 40 quality measures, which are designed to promote high-quality healthcare. These measures cover a wide range of categories, including:
- Customer service and member experience
- Keeping members healthy through screenings, vaccines, and tests
- Managing chronic conditions
- Member complaints and appeals
- Drug safety and the accuracy of drug pricing
CMS calculates these performance measures annually, releasing star ratings each year right before the Annual Enrollment Period to help enrollees compare and evaluate plans in their area.
Why Star Ratings Have Dropped
Part of the decline over these recent years is due to a return to normal scoring methods, putting an end to the COVID-19 provisions that made it easier for plans to navigate the pandemic without facing penalties.
CMS has also made some changes to its scoring methodologies in 2024, which may now be having an impact. For each quality measure, CMS sets a threshold, also known as a cut point. These cut points determine how well a plan performed and what its star rating will be. The new methodology removes any extremely high or low scores (outliers) from the data calculations, as this should allow for more predictable and stable scoring year over year. Several insurers who saw their ratings dip as a result of this change are challenging the results. They believe the change has made it more difficult to achieve and maintain four- and five-star ratings. Experts believe scores will continue to dip until plans adjust to the change.
Why Star Ratings Matter to Insurers
Star ratings have a significant financial impact on plans because CMS rewards high-performing plans with a bonus. The 2025 star ratings will determine what bonus the plans will receive in 2026. Any plans with 3.5 stars or more are eligible for a bonus, with 4.5- and five-star plans receiving the highest bonuses. This may mean millions of extra dollars that allow plans to enhance their supplemental benefits and lower out-of-pocket costs for their members.
Five-star plans also enjoy the benefit of a Five-Star Special Enrollment Period, which allows beneficiaries to switch to the plan at almost any time of year. This creates positive name recognition in the community and increases enrollment, giving the plan an advantage over competitors in the marketplace.
Helping Your Clients Weigh the Importance of Star Ratings
Your clients are probably familiar with the five-star rating system, but they may not know how to weigh its importance when choosing a plan. A high star rating indicates a stable, high-performing, and well-run plan, but there are also other considerations they should take into account:
- Does the plan’s network include their doctors and hospitals?
- Does the plan’s formulary cover their prescription medications?
- Can they afford the plan’s out-of-pocket costs?
Help your clients consider all aspects of a plan and how well it aligns with their healthcare needs and budget to ensure they make an informed decision.
PTT Financial is here to support you. Contact us today.
