The Centers for Medicare and Medicaid Services (CMS) annually assigns star ratings of 1 to 5 to Medicare Advantage (MA) plans. These ratings can affect plans’ enrollment, continued participation in MA, and plan compensation. Plans with ratings below 3 stars for three consecutive years can be terminated from the program. Under the Affordable Care Act, plans with higher ratings get additional payments, some of which they use to reduce enrollee cost or to provide additional benefits not covered by Medicare, such as dental, hearing, or vision services. In 2021, 80 percent of MA beneficiaries enrolled in a plan with a score of 4 or higher, and these plans received more than $11 billion total in additional payments.
During the COVID-19 pandemic, CMS changed the rules regarding how star ratings were calculated. In June, a federal judge ruled against three Medicare Advantage plans that sought to overturn the CMS rule. In addition to allowing the changes to stand, the ruling could have broader implications on how CMS uses data, potentially altering the way star ratings are calculated. There have been concerns that high ratings are not a good indication of quality.
- 09/02/2021: The Commonwealth Fund Blog – Federal Court Upholds Changes to Medicare Advantage Star Ratings During the COVID-19 Pandemic