As the COVID-19 pandemic raged on, the Centers for Medicare and Medicaid Services relaxed how it calculated Medicare Advantage Star ratings for 2021 and 2022. Doing so resulted in a record number of plans last year earning four or more Stars on a five-star scale. In fact, 68% of plans that offered a prescription drug benefit in 2022 garnered four stars, up from 49% in 2021 and 52% in 2020.
That was then. We are in a new normal now. For the 2023 plan year, CMS eliminated most of the COVID-19 flexibilities. That, along with other program changes, led to a precipitous drop in Star ratings — 51% of MA plans with drug coverage achieved four or more Stars. The average Star rating for MA plans fell to 4.15 stars for 2023, down from 4.37 in 2022.
With more growth and competition expected in the MA market over the next several years, plans need to adjust their strategies to account for these policy and programmatic changes. In particular, greater attention must be paid to the entire member journey.
Current State of Stars
The Medicare Star ratings quality program assesses performance of MA plans across several key dimensions related to care and services received by plan members. The program also aims to incentivize Medicare plans to continuously improve operations. Plans achieving a 4-Star rating or higher receive a 5% quality incentive bonus (among other financial and non-financial benefits).
With average bonuses for individual Medicare plans of around $350 per member annually, 4+ Star performance is a critical driver of Medicare Advantage plans being able to provide more robust benefits to their members, and often represents the difference between operating at a profit or a loss. CMS paid out more than $10 billion in bonuses in 2022, a figure that has steadily increased every year since 2015. The rating system is also designed to influence consumer behavior, encouraging seniors to vote with their feet by selecting higher quality-rated plans.
Out with the Old, In with the New: Key Stars Updates
CMS continually tinkers with the rating methodology to advance the program and keep plans from getting complacent. The 2023 plan year was no different and the drop in 4+ Star ratings can be attributed to a few impactful moves by CMS:
1. No more selecting best performance in 2023: Elimination of a COVID-based “hold-harmless” policy for 2023 that allowed plans to select the better of the prior years’ ratings for select measures. This policy was in place for select measures for rating years 2021 and was expanded in 2022 — a key reason why so many plans were highly rated in 2022. Reverting to the pre-pandemic policy undoubtedly had an impact on 2023 ratings.
2. Member Experience is the new HEDIS: Shift of relative importance in ratings from clinical performance to customer perception of care access/quality, customer service, and operational performance. Relative weights for CAHPS measures (e.g., Getting Needed Care, Customer Service) and operational measures (e.g., performance related to Complaints, Disenrollment, and Appeals) went from 2x weight for Stars Year 2022 to 4x weight for Stars Year 2023, while relative weights for most clinical HEDIS measures remained as 1x weight. Medication Adherence measures remain important with a 3x weight for each of the three adherence measures.
3. Harder to reach cut-points in the future: For rating year 2023, CMS has instituted guardrails for non-CAHPS measures to enhance stability of cut-points year-over-year. Introduction of the Tukey statistical methodology for Stars Year 2024 (applicable to measurement year 2022) will also enable more stable cut points that are less sensitive to outliers; however, it will also result in relatively higher cut points for certain measures – making it harder to achieve high rankings.
Adjusting to Stars Changes
These changes require Medicare Advantage plan leaders to think differently about how they approach Stars performance management and will likely require investment in new capabilities to ensure their organizations can achieve or maintain 4+ Stars. We have identified four critical moves for leaders when considering what to do next:
1. Invest in CAHPS programs and member experience: MA plans must develop a clear strategy for tracking member experience tied to CAHPS and operational measures, ensure the entire organization understands the importance of what is captured in CAHPS surveys, and identify how to proactively influence member experience. Since CAHPS results are lagging indicators, if you wait to find out how you’re performing, you’re going to be too late to remediate that performance. Plans need to proactively track member perception at key interaction points throughout the year and create a culture of sustainable innovation that improves interactions quickly if/when hotspots emerge.
2. Broaden who sits at the table: Historically, Stars teams have collaborated closely with Quality/HEDIS focused stakeholders. Ensuring that customer and member services, member engagement, operations, and community outreach teams have a seat at the table can help appropriately shape and define actions needed to achieve a 4+ Star performance. It is critical to establish a clear operating model and governance structure to define accountability for Stars measures across CAHPS and operations. Additionally, it is important for all stakeholders to be trained and made aware of Stars changes – each team should understand their ability to impact key measures.
3. Partner with providers for experience measures: Plans have used provider partnerships to close HEDIS gaps for years, but providers can impact far more than just clinical measures. Many CAHPS measures, including Care Coordination, Getting Care Quickly, and Getting Access to Care ask patients about their total healthcare experience. Members typically don’t decouple their experiences – positive or negative – and whether it was driven by a provider or insurer. Therefore, it is critical to ensure provider engagement teams are prepared to talk about member experience with providers, and that incentives are established to improve member experience.
4. Don’t lose sight of high-weighted measures: While the updated CAHPS weights and operations measures represent over 50% of the total Star rating, it is important to ensure strong performance of other high-weighted measures. The three medication adherence measures, in particular, have seen consistent increases in cut-points in recent years. Plans that merely maintain performance will struggle to keep their overall Stars performance, given that these measures are each 3x weighted. Health plans must ensure that there is a clear plan in place to proactively influence and track adherence from the start of each year and establish processes to segment and prioritize members for adherence outreach and engagement.
The Medicare Stars program will continue to evolve as CMS heeds calls from Congress, the Medicare Payment Advisory Commission, and others to improve measures and adjust for changing quality of care and social risk factors. Addressing member experience is increasingly driving which plans earn the Stars bonus – but it takes time and requires building new capabilities to listen and learn from your members, and to adjust systems and processes that are well-established and slow moving. Starting to review and strategically invest in that experience today is critical for long-term sustainability of your Stars program and MA plan.