Why payers' Medicare Advantage star ratings decreased

Experts predicted a decline in CMS Medicare Advantage ratings because of methodology changes and the end of relaxed standards to account for pandemic tumult. 

CMS released the 2023 Medicare Advantage ratings Oct.6, and those predictions came true as many payers saw their plans take a hit. 

Plans with four or more stars are eligible for quality bonus payments from CMS — and plans that drop below that level will lose money. 

Aetna's National PPO plan, a large Medicare Advantage plan covering 1.9 million members, received a 3.5 star rating for 2023, down from four stars in 2022, parent company CVS Health said in a regulatory filing. 

In the filing, the company said it expects to be able to mitigate the impacts of losing the CMS bonus payments. 

"With respect to 2024, our strategy is to mitigate some of the impact of the loss of star bonus payments through our ongoing contract diversification efforts," the filing says. 

Centene executives also predicted a drop in ratings. During a second quarter earnings call in July, executives said the ratings would be "disappointing and unacceptable." 

In July regulatory filings, the insurer said it expected to see a "meaningful decrease" in ratings as a result of the end of pandemic emergency methodologies.

Why ratings decreased 

According to a Sept. 15 analysis from McKinsey and Company, a few changes in disaster provisions and methodology had big impacts on ratings. In 2022, CMS allowed plans to use the  better of current and historical performance measures in ratings, an option not extended to plans in 2023. 

CMS is also limiting year-over-year changes in cut points — the score needed to achieve a particular star rating — according to McKinsey. These cut points will be more stable in the future, allowing plans more predictability as to what their ratings will be, and what measures they need to maintain or improve to reach higher ratings. 

CMS is also removing performance outliers from data considered for ratings. 

"For plans that successfully adapt to a more demanding star ratings environment, quality may emerge as a source of competitive advantage," analysts wrote. 

Majority of enrollees stay in high-performing plans

In a statement issued Oct. 6, AHIP president Matt Eyles said the association "looks forward to engaging with CMS to address methodological and other issues to ensure that there are accurate, reliable indicators of plan performance."

In a March letter to CMS, AHIP had asked the agency to keep pandemic-related measures in place for the 2023 ratings, and expressed concerns with the methodology. 

Despite overall decreases in average star ratings, Mr. Eyles said in the recent statement that the majority of Medicare Advantage enrollees are in high-performing plans. 

In an Oct. 6 news release, CMS said around 72 percent of Medicare Advantage enrollees will be in plans with four or more stars in 2023. 

Mary Beth Donahue, president and CEO of the Better Medicare Alliance, said in a news release that Medicare Advantage continues to provide high-quality care, despite average rating drops. 

"We remain committed to ongoing partnership with CMS on the continued improvement and evolution of the star ratings system while ensuring that Medicare Advantage beneficiaries continue to receive the high-quality, affordable, coordinated care that they choose and deserve," Ms. Donahue said.

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