Issue Brief

No. 854

The Star Rating System and Medicare Advantage Plans
May 5, 2015

Author

Lisa Sprague, MBA

Summary

With nearly 30 percent of Medicare beneficiaries opting to enroll in Medicare Advantage (MA) plans instead of fee-for-service Medicare, it’s safe to say the MA program is quite popular. The Centers for Medicare & Medicaid Services (CMS) administers a Star Ratings program for MA plans, which offers measures of quality and service among the plans that are used not only to help beneficiaries choose plans but also to award additional payments to plans that meet high standards. These additional payments, in turn, are used by plans to provide additional benefits to beneficiaries or to reduce cost sharing—added features that are likely to factor into beneficiaries’ choice of MA plans. The Star Ratings program is also meant to drive improvements in the quality of plans, and this secondary effort seems to have been successful. Despite this success, issues with the Star Ratings system remain, including: how performance metrics are developed, chosen, and maintained; how differences among beneficiary populations (particularly with regard to the dually eligible and those receiving low-income subsidies) should be recognized; and the extent to which health plans can control the variables on which they are being measured. Because the Star Ratings approach has been extended to providers of health care as well—hospitals, nursing homes, and dialysis facilities—these issues are worth exploring as CMS fine-tunes its methods of measurement.

Related Materials

See also the slides and background material from our meeting "Quality Stars: Medicare Advantage Plans and the Star Rating System" (Forum Session, May 8, 2015).

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