On October 8, 2015, the Centers for Medicare and Medicaid Services (CMS) released the Medicare Advantage (MA) Star ratings for 2016. We analyzed CMS’s data covering 642 MA plans and prescription drug plans across the 50 states to develop a perspective on the payor industry’s Stars performance. Four key observations emerged from our analysis:
- Since last year, the total number of consumers in MA plans with 4 or more Stars grew by about 18%. The industry’s enrollment-weighted average Star rating rose from 3.92 to 4.03.1
- The primary cause of the increased rating was improvements in plan performance, and not CMS changes to cut-points, measures, or methodology.
- Changes to certain individual Star measures did influence—positively or negatively—the ratings of some plans. For the industry overall, however, the scoring changes largely cancelled each other out.
- Although plans based on health maintenance organizations (HMOs) outperformed the market in previous years, local preferred provider organization (PPO) plans performed best this year, with an enrollment-weighted average Star rating of 4.16.
- This year, like last year, plans built around integrated delivery networks (IDNs)2 received a higher weighted average rating (4.45) than plans offered by commercial carriers3 (3.96) or Blues carriers (3.86). However, commercial and Blues carriers continue to close the gap.
- The 2016 enrollment-weighted average Star ratings are lower for carriers with fewer than 20,000 MA members (3.45) than for carriers with MA enrollment between 20,000 and 100,000 (4.12) or above 100,000 (4.03).
Star ratings have increased since last year
Since last year, the MA market has grown by 7% (from 15.7 million to 16.8 million members). The total number of consumers in MA plans with 4 or more Stars grew by about 11 percentage points. Overall, close to 50% of this year’s MA plans achieved a Star rating of 4 or higher, compared with 40% last year. Across all MA plans, the enrollment-weighted average Star rating rose from 3.93 to 4.03. We estimate that 2016 plans with fewer than 4 Stars may forego $2.03 billion in potential bonus payments;4 comparable 2015 plans gave up $3.47 billion.
To understand the cause of the higher Star ratings, we analyzed the scores the MA plans would have achieved had CMS not changed the cut-points for certain measures, added (or subtracted) measures, or altered the methods used to calculate Star ratings. The initial results strongly suggested that the key driver of this year’s higher Star ratings was improvements in the performance of many plans; indeed, improved performance accounted for nearly all of the enrollment-weighted average Star rating increase.
When we dug deeper, we learned that a few of the changes in cut-points did influence the Star ratings for MA plans. For example, cut-point changes increased the enrollment-weighted average rating per individual metric for appeals auto-forward (+1.19), medication adherence for hypertension (+0.94), and improving or maintaining mental health (+0.93). In contrast, cut-point changes caused decreases in the weighted average rating per individual metric for improving or maintaining physical health (–1.35), Medicare Plan Finder price accuracy (–0.91), and colorectal cancer screening (–0.90). However, these increases and decreases largely cancelled each other out. As a result, improvements in plan performance remain the largest cause of this year’s higher Star ratings for MA plans.
Average Star ratings vary by product type
Among all MA plans, local PPO plans received the highest enrollment-weighted average Star rating (4.16) this year, a significant improvement from last year’s 3.87. HMO MA plans received an enrollment-weighted average Star rating of 4.07 this year, compared with 3.96 last year. Regional PPO MA plans received an enrollment-weighted average rating of 3.33, a significant drop from their enrollment-weighted average of 3.51 last year.
Since last year, enrollment in local PPO MA plans with 4 or more Stars grew by 1.4 million. Conversely, enrollment in regional MA plans with a lower than 4-Star rating increased by approximately 0.5 million.