- About 42% of Medicare Advantage plans offering prescription drug coverage in 2024 will receive four or more stars, a decrease from 51% of plans this year and 68% of plans in 2022, according to data released on Friday by the CMS.
- The five-star annual ranking system was established by the Affordable Care Act to help beneficiaries compare the quality of MA plans and Part D prescription drug plans ahead of the open enrollment period, which runs from Oct. 15 through Dec. 7. But the ratings are also a key financial indicator for insurers, as they determine whether a plan receives a bonus and its ability to bid against a higher benchmark rate.
- The change in distribution of stars from this year to next is influenced by changes in scores “in both positive and negative directions based on contract performance” and the new Tukey outlier deletion, according to the CMS.
MA has become increasingly popular over the past decade, with more than half of eligible beneficiaries enrolled in the private plans for seniors in 2023.
This year, a little more than half of MA plans offering prescription drug coverage had four or more stars, a decline after most plans received a regulatory adjustment during the COVID-19 pandemic.
The Tukey deletion, a methodology change that was finalized in 2020 and goes into effect with the 2024 star ratings, removes performance outliers from all non-Consumer Assessment of Healthcare Providers and Systems (CAHPS) measures.
A McKinsey report from last year predicted the new methodology could cost MA plans $800 million in revenue in 2024.
Weighted by enrollment, about 74% of enrollees in MA plans with prescription drug coverage are currently in contracts that will have four or more stars next year, according to the CMS.
In the wake of 2023 star ratings released last year, some analysts noted insurers who saw the biggest decreases could face earnings headwinds after losing out on Medicare revenue from bonuses tied to stars.
CVS Health, which owns insurer Aetna, disclosed in May that it expected its 2024 operating income to drop by up to $1 billion due to lost bonus payments after its star ratings fell. Last month, CEO Karen Lynch said she was “optimistic about where we will land relative to our stars performance” in 2024.
Centene, another payer that saw its star ratings fall in 2024, runs four out of six contracts cited by the CMS for consistently low quality ratings in its report.
Centene last month confirmed that it was laying off 2,000 employees as it managed headwinds from MA and ongoing Medicaid redeterminations.
Federal spending on MA bonus payments have steadily grown since 2015, and will reach at least $12.8 billion this year — an increase of nearly 30% from 2022, according to a report by KFF.
The stars system aims to improve the quality of MA plans, but a report from the Urban Institute this summer argued that the quality bonus program should be reformed as it hasn’t resulted in better care outcomes compared with fee-for-service Medicare.